Advisors are finding unique ways to win clients coverage for long-term care despite traditional concerns about high costs.
An industry expert suggests the biggest issue when it comes to LTC insurance is cost. Whether you’re an advisor in Canada or the U.S., your clients, whether young or old, rich or poor, are likely most interested in ways to reduce premiums.
“Every long-term care sale is a cost problem,” said Len Cohen, CFP with CFS Services Group Inc. in Gaithersburg, Maryland. “I don’t deal with ultra-high net worth clients but I do have clients who are in the upward of $2 million net worth range and even they are surprised by the cost of long-term care and looking for ways to reduce the premium.”
Here in Canada long-term care insurance hasn’t taken off to nearly the extent as in the U.S., which itself has seen many companies leave the business due in part to government interference. It’s unfortunate when you consider that the duration of most long-term care claims is far shorter than people realize.
“If you look at the claims and you say, ‘what’s the average length of a claim?’ Ninety per cent of them are under five years,” says Toronto insurance consultant Sean Long. “So what are you selling a product to age 100 for or 30 years? That then means you’ve weighed the product. It’s a highly profitable product.”
As far back as 2003 Long was predicting that long-term care insurance would fail in Canada because it was designed and marketed improperly.
“Get the advisors to sell a 20-year benefit and they’ll discourage you from selling a 10-year or under. ‘Well what happens if the client goes beyond 10 years?’ Well beyond that the family’s had nine-and-a-half years to figure something out,” Long says. “They’ve miss-designed the product. They designed the product for maximum profitability and not for the marketplace.”
The easiest solution according to Long is to reduce the length of the contracts.
“So, if you say here’s a product with a two-year benefit, a five-year benefit, or a seven-year benefit, that would sell,” says Long. “It would lower the cost by about 55 to 60 per cent.”
“Every long-term care sale is a cost problem,” said Len Cohen, CFP with CFS Services Group Inc. in Gaithersburg, Maryland. “I don’t deal with ultra-high net worth clients but I do have clients who are in the upward of $2 million net worth range and even they are surprised by the cost of long-term care and looking for ways to reduce the premium.”
Here in Canada long-term care insurance hasn’t taken off to nearly the extent as in the U.S., which itself has seen many companies leave the business due in part to government interference. It’s unfortunate when you consider that the duration of most long-term care claims is far shorter than people realize.
“If you look at the claims and you say, ‘what’s the average length of a claim?’ Ninety per cent of them are under five years,” says Toronto insurance consultant Sean Long. “So what are you selling a product to age 100 for or 30 years? That then means you’ve weighed the product. It’s a highly profitable product.”
As far back as 2003 Long was predicting that long-term care insurance would fail in Canada because it was designed and marketed improperly.
“Get the advisors to sell a 20-year benefit and they’ll discourage you from selling a 10-year or under. ‘Well what happens if the client goes beyond 10 years?’ Well beyond that the family’s had nine-and-a-half years to figure something out,” Long says. “They’ve miss-designed the product. They designed the product for maximum profitability and not for the marketplace.”
The easiest solution according to Long is to reduce the length of the contracts.
“So, if you say here’s a product with a two-year benefit, a five-year benefit, or a seven-year benefit, that would sell,” says Long. “It would lower the cost by about 55 to 60 per cent.”
