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Long-term care insurance: Start small and build

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Advisers need to approach the topic of long-term care the way most people approach old age: They have to ease into it.

Don't immediately launch into a conversation about nursing homes and present clients with options for comprehensive – and therefore expensive – long-term care insurance. The sticker shock will scare them and "everything shuts down for them," said Nationwide's Roberta Eckert during a product showcase at the BISA convention on Thursday.
Eckert, a vice president in Nationwide's Retirement Institute, urged attendees to instead start with a basic level of care, such as home health care.

"Start small and begin to build from there instead of starting big and scaling back," she said.

For many people, insuring for the basics of home health care "might be enough to keep the wolves from the door" and "keep their portfolio from being depleted," she said.

Once clients are comfortable with their home health care coverage, they will be more open to insuring for the cost of assisted living facilities and nursing homes, according to Eckert.

Eckert encouraged advisers to get their clients' views on what kind of legacy they want to leave to their children. If they want to leave a big legacy, long-term care insurance becomes "a bigger component" because the objective of an insurance policy is to keep their assets from being depleted, Eckert said.

They should also ask their clients it they want their children to provide their care or merely manage their care. Many clients don't want to burden their children with taking care of them as they age and become frail. They would rather pay for outside help and have the children manage the caretakers.

In such a situation, clients are willing to leave their children less money, Eckert said.

Eckert urged advisers to think of ways that long-term care insurance can be funded before broaching the topic with clients. "Before you have the meeting, find out how you're going to solve for that problem," she said.

Advisers should look for "sleeping" or "lazy" assets, such as CDs and IRAs and annuities that aren't needed for retirement income.

"Try and solve that before they get in the door because long-term care isn't something that they always think they need," Eckert said.

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