Long-term care is a necessary part of retirement for the majority of Americans, but it is often overshadowed by other medical needs that crop up during retirement. Medical costs are one of the biggest retirement expenses, and long-term care represents an additional burden on top of other necessary medical treatments.
LTC policies cover the costs of ongoing nursing care for individuals with chronic conditions or those who need consistent supervision. These expenses can add up rapidly, diminishing a person’s capital. That can be a shocking realization for high net worth individuals who enter retirement with a substantial nest egg. Financial professionals should introduce LTC options early in their relationship with a client to avoid sticker shock when that individual retires.
The state of LTC insurance
In the past, more companies offered long-term care policies, but the number of insurers in the LTC market has fallen in recent years, according to a new white paper from Spectrem Group. That’s because increasing life expectancies mean people spend more time in retirement, and potentially remain in long-term care for a greater period of time. That increased costs for insurers, and forced many to leave the market. This trend should indicate the value of LTC insurance to consumers, as without a policy, they will absorb the high cost of extended care themselves.
Mass affluent individuals are excellent candidates for LTC policies, but many have avoided purchasing them in the past. These clients cite several objections as reasons they have not purchased a policy, but their top worry is the cost of a policy. Financial professionals should address this concern directly by speaking with clients about the true costs of long-term care and illuminating how an LTC policy helps consumers avoid becoming overwhelmed.
These mass affluent consumers also indicated to Spectrem that they felt LTC policies are lower priority than other financial issues and that they have other ways of saving for these costs. While immediate financial need may be more important than a long-term care policy for some clients, the majority will benefit from an LTC policy that safeguards their personal wealth and allows them to preserve capital for beneficiaries.
Sources of information
Across all the high net worth categories Spectrum surveyed, consumers indicated that they are most likely to hear about long-term care policies from a financial professional who is not their primary advisor. This represents a missed opportunity for the majority of financial professionals who are not addressing their clients’ needs directly.
To counteract this trend, financial professionals need to speak with their clients about LTC insurance frequently. This is particularly important when working with women, according to USA Today, as they are more likely than men to live on their own in old age. Financial professionals who identify ideal LTC candidates in their client base may find that these consumers were simply unaware of the benefits an LTC policy can provide.