When you hear “extended care planning,” traditional long-term care insurance (LTCI) may be the first solution that comes to mind. But today’s marketplace offers agents more ways to help clients prepare for a future care event. Depending on a client’s age, health, finances, existing assets, and goals, the right strategy could include traditional LTCI, hybrid life/LTC coverage, an annuity-based solution, short-term care insurance, or a combination of these options.
That means the conversation shouldn’t begin with: “Which LTC policy should I sell?” Instead, ask: “What problem are we trying to solve for this client?”
Start With the Client, Not the Product
Every client approaches extended care planning differently. One may be concerned about protecting retirement assets. Another wants to remain at home. Someone else may be most concerned about becoming a burden on their spouse or children. Before discussing products, consider asking:
- Where would you want to receive care?
- Who would likely help coordinate or provide your care?
- How much of the cost could you comfortably pay yourself?
- Do you have assets you would consider repositioning for care?
- Is leaving a legacy important to you?
- What concerns you most about needing extended care?
Once you understand the client’s priorities, you can begin by matching those needs with available solutions.
Read More: When Clients Need Long-Term Care: Helping Them Know Where to Start
Four Solutions to Consider
Traditional LTC Insurance
For clients who are healthy enough to qualify and comfortable paying an ongoing premium, traditional LTCI can provide dedicated coverage specifically for extended care. Benefits can generally be customized based on monthly benefit, benefit period, elimination period, and inflation protection. Traditional coverage can be particularly attractive to clients who want meaningful protection without repositioning a large lump sum.
Hybrid Life + LTC
Some clients hesitate to purchase traditional LTCI because they don’t like the idea of paying premiums for coverage they may never use. Hybrid policies combine life insurance with long-term care benefits. If care is needed, benefits may be available for qualifying care expenses. If little or no care is needed, a death benefit may remain for beneficiaries, depending on the policy. For the client who says, “What if I never use it?” hybrid coverage can provide a compelling alternative.
Annuity-Based LTC Solutions
Some clients already have money sitting in an annuity, CD, savings account, or other asset that isn’t specifically earmarked for a future care event. An annuity-based LTC solution may allow an appropriate client to reposition an existing asset and create additional leverage for extended care. Rather than asking the client to add another premium to the household budget, you may be able to ask a different question: “Is there an existing asset we can reposition to help fund this risk?”
Short-Term Care Insurance
Don’t overlook short-term care. STC can be particularly valuable for older clients or those who may have difficulty qualifying for traditional LTC coverage. While the benefit period is shorter, coverage may still provide meaningful assistance for home health care, assisted living, or other covered services.
A smaller policy can still make a significant difference. Even a year or two of benefits may help protect savings, provide time for a family to make longer-term decisions, and reduce the immediate financial impact of a care event.
Case Study: Meet Rose, Age 71
Rose is 71, retired, and financially comfortable. She has retirement income and savings but doesn’t have enough assets that she feels comfortable simply self-funding an extended care event. Her biggest concern isn’t necessarily losing her money. Rose doesn’t want her daughter to become her caregiver.
She initially asks her agent about traditional LTCI. Instead of immediately running a quote, the agent takes a broader approach. They discuss Rose’s health, finances, family, existing assets, and care preferences. Rose explains that she would strongly prefer to remain at home. She wants money specifically designated for care, but she isn’t excited about taking on a substantial ongoing premium at age 71.
Rather than presenting one solution, her agent explores several:
- Traditional LTCI: If Rose qualifies medically and the premium fits her budget, a traditional policy could provide dedicated benefits for future care.
- Hybrid Life/LTC: Rose could potentially reposition a portion of her assets into a policy providing LTC benefits along with a death benefit if care isn’t needed.
- Annuity-Based LTC: If she has an appropriately positioned existing annuity, CD, or other asset, she may be able to leverage those dollars for future care.
- Short-Term Care: If health, age, affordability, or underwriting makes other options less attractive, STC could provide a more manageable layer of protection.
The lesson isn’t which product Rose ultimately chooses. The lesson is that her agent didn’t stop after looking at one solution.
Read More: The Power of Planning: Turning Uncertainty into Control with Long-Term Care Strategies
Planning Doesn’t Have to Be All or Nothing
Clients don’t necessarily need to insure 100% of their potential extended care costs. Rose might purchase enough coverage to pay for a significant portion of home care and use retirement income for the balance. Another client might combine short-term care coverage with existing savings. Someone else might reposition an existing asset into a hybrid or annuity-based solution. The objective is to answer three important questions:
- Where will care come from?
- Where will the money come from?
- Who will coordinate the plan?
Expand Your Toolbox
Extended care planning is no longer about having one product available for every client. Traditional LTCI may be the answer. Hybrid coverage may be the answer. An annuity-based strategy or short-term care policy may be the answer. Sometimes, the answer is a combination.
Your value as an agent is knowing that when Plan A doesn’t fit, there may still be a Plan B, C, or D. Don’t start with the product. Start with the person. Then build the solution around them.