How to Overcome Objections to Hybrid Long Term Care Insurance
- By Julie Stewart
- October 28, 2015
When you think about long term care insurance, providing independence, safeguarding dignity, and protecting assets come to mind. It is simply a way to maintain one’s freedom and independence without sacrificing financial well-being in the event of a need for care. We all know the statistics say we are very likely to need care during our lifetime but most people believe it will never happen to them and as a result they do not want to pay for it.
When your client is honest about the realities of life and they want to make long-term plans, they need to look at things as they are and account for the “what if’s” that are still way down the road.
Effective insurance planning has always been central to offsetting risk. However, as the Long Term Care market has evolved, the policy benefit volatility and the price escalation has left more and more potential customers without coverage. As a result, many people now have a large hole in their financial plan.
This is one problem that hybrid long term care insurance policies were designed to solve. Simply put, this kind of policy allows individuals and families to establish a plan that will pay for the care they might need or give them their money back if they do not need care.
What’s the catch?###
Although these hybrid policies can be very attractive, many people find this option “too good to be true”.
Here are a few points to focus on so that your client gets the big picture perspective on why the hybrid insurance solution may be just what they need.
Reality is uncomfortable.
Continuing care in nursing homes is one of the many things that is missing from Medicare. With a majority of clients needing care during their lives, we have to be ready to address the huge yellow light prospects consistently hold up in front of us. Most people think; yes this is important but it will happen to someone else, not me. You cannot close the sale with someone who does not feel they have a need. So “do not barrel through the light”, stop to engage their reality, ask questions and listen. You might be surprised that they convince themselves there is a need.
Not those dollars.
You probably know that hybrids carry a heavier price tag up front, with premiums typically in the $100k to $250k range. Most people have dollars that are on the sidelines or not efficiently invested. When we mention a large up front premium many people react negatively because they are thinking about the wrong bucket. You are not asking them to liquidate their emergency fund or make a huge taxable withdrawal from their IRA, so make sure they know that. You need to demonstrate that your goal is to help them reallocate not make wholesale changes. In addition, you can spread the premium out over a lifetime, which means some clients can fund this plan out of cash flow. Make sure that your client understands which dollars you think are a fit for this product.
Hybrid policies provide value.
When asked what they would tell their younger selves if they could, oncology patients overwhelmingly said they would spend their time and money differently. The value of long term care insurance is that it ultimately frees the client to choose the type of care they want and to choose where they receive that care. The older we get the more value we place on time, and we want to be able to spend that time in a way that has value. Reallocating resources to provide independence without the fear of exhausting their nest egg is value worth paying for. When you consider the value and the money back guarantee, hybrid long term care insurance becomes an easy decision for the client that can grab on to the concept.
Positioning hybrid policies is a matter of understanding what your client’s goals are and knowing how to tell the story in a compelling way. Remember that the question behind the question really is “what is the catch?” and you will be ready to impact the lives of your clients and their families in a tremendous way.