How to Handle Client Objections to LTCI

As an insurance agent or financial advisor, you’ve probably experienced clients hesitant to buy an insurance product. It’s normal for a client to want extra time to consider their options. In fact, some long-term care insurance clients have taken years to purchase a solution. However, it’s important to have tools in your arsenal to combat client objections and hesitations. Here are a few common objections that we hear regarding long-term care insurance.

Read More: The Importance of Creating a Plan for Aging

Long-term care insurance is expensive!

This is a matter of perspective. For instance, long-term care services are expensive, but LTCI is a fraction of what LTC services cost. Developing a solution that satisfies your client’s concerns while considering cost is imperative. Your client may not be able to afford a policy with lots of bells and whistles, but that’s fine! A small policy will still provide much-needed coverage for long-term care services. It will also provide a lifeline to their family with included benefits such as care management, respite care, and home modifications. A typical average premium is $200/month, which is less than $7/day. LTCI is one of the most affordable ways to protect your client’s retirement savings.

What if I don’t need long-term care?

Clients turning 65 today have more than a 50% chance of needing long-term care.¹ Even if your client is healthy today, increased longevity brings a higher probability of needing long-term care services, thus putting their retirement savings at risk. Although an insurance policy is designed to cover a substantial risk, the hope is that your client won’t need to use the policy. That’s why asset-based long-term care insurance policies also include a death benefit or return of premium. If your client does not need long-term care services, a benefit will be paid to their beneficiary upon their passing.

What if my rates increase?

Longevity and persistency assumptions on early LTCI products have proven to be inaccurate. Insurers underestimated how long people would live and how many people would drop their coverage over time.  Another unknown at the time was the extent of the impact that cognitive memory disorders, such as Alzheimer’s disease, would have. People can live a long time with dependency needs from Alzheimer’s and similar memory issues. These inaccurate assumptions have led to rate increases for most of the major insurance carriers at least once.

Another aspect that has played a significant role in the rate increase activity on policies purchased in the 1990s-early 2000s was the low interest rate environment. Carriers invested in markets that simply did not bring the return they expected. Across the board, most families were affected by the low interest rate environment, whether in the stock market, their retirement portfolios, or other investment products. Today, the carriers’ assumptions of these investments have changed. They have a more conservative approach to interest rates and returns, which is reflected in the product pricing of the policies available.

This foresight and tightened regulation bring great news to the long-term care insurance consumer of today. Working from historical data, including claims experience and persistency tables, carriers can better project where rates should be and forgo future rate increases. Rates on long-term care insurance are more stable now than they have ever been in the past.

I don’t want to go to a nursing home.

Of course, like most individuals, your client would rather not go to a nursing home. Fortunately, residing in a nursing home is not the goal of long-term care insurance. In fact, most long-term care claims are paid for at-home care and assisted living facilities. The majority of patients in a skilled nursing facility (62%²) are in Medicaid-paid beds, meaning they have spent down their assets to qualify for Medicaid. Long-term care insurance gives your client options as to where they receive care and by whom. Most LTCI policyholders do not receive care in a skilled nursing home.

My spouse or children will take care of me.

Yes, your client’s spouse and children will play a significant role in their caregiving. This is true even with a long-term care insurance policy. Some LTCI policies also include a cash benefit, which allows your client to pay their spouse or children to assist in their care. LTCI also allows your client’s family to be care managers rather than be responsible for their care on a 24/7 basis. Being a caregiver is a rewarding opportunity, but it comes with physical and emotional stress to the provider. It can also cost the caregiver in terms of lost wages, career advancement, and other out-of-pocket expenses. Additionally, assisting a parent with personal care and hygiene tasks may be uncomfortable for your client’s children.  Your client should consider these factors and carefully navigate these conversations with their loved ones.

I will self-insure.

Yes, some of your clients may be able to self-insure. However, women typically need care longer (3.7 years) while men require 2.2 years on average.³ What if both your client and their spouse need care at the same time? It’s important to ask: Where will the money come from? Will they create a separate savings account? Or will they liquidate an asset to pay for care? Will there be a tax consequence for doing so? Aside from using long-term care insurance benefits to pay for care, policies also come with a care management team who can assist your client’s family in accessing the proper care. If your client’s family has never experienced a caregiving situation, it can be very stressful to navigate without much direction provided by hospitals, health insurance, Medicare, or doctors’ offices. Clients and their families are often left navigating the long-term care system on their own. However, with LTCI, they can get the direction and guidance they need with the help of dedicated care managers.

I will wait until next year.

Let’s face it: no one wants to plan for long-term care. Your client doesn’t want to consider they may need care one day. It’s easier to procrastinate and put off the decision. But the cost of waiting is two-fold. Not only are LTCI premiums based on age, but they are also based on health. By waiting, your client’s premium will be higher for the life of the policy (usually about 7-10% each year that they don’t purchase), and they may also develop a health issue that either disqualifies them from a health discount or renders them uninsurable altogether.

Everyone wants to be comfortable in retirement. Planning for a long-term care crisis is not comfortable, but it will provide peace of mind to both them and their family. If your client still needs extra time to consider their options, keep them on a short list and continue to follow up with them periodically. If they have made a firm decision that they will not be purchasing a long-term care insurance policy, we can provide you with a voluntary waiver of long-term care insurance coverage for them to sign and for you to keep in their file. This promotes full disclosure to the client that they are waiving LTCI against recommended advice. You can request this form from one of our team members.

If you are seeking direction and advice regarding long-term care insurance in general or for a specific client, our team is available to help! Contact us today at (800) 255-1932.

1. Projections of Risk of Needing Long-Term Services and Supports at Ages 65 and Older, U.S. Department of Health and Human Services, January 2021, https://aspe.hhs.gov/sites/default/files/private/pdf/265136/LTSSRisk.pdf

2. A Look at Nursing Facility Characteristics Through July 2022, Kaiser Family Foundation, https://www.kff.org/medicaid/issue-brief/a-look-at-nursing-facility-characteristics-through-july-2022/

3. How Much Care Will You Need?, Administration for Community Living, February 2020, https://acl.gov/ltc/basic-needs/how-much-care-will-you-need