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Our guest columnist is Dave Donchey, CLU. Dave is the Director of Long-Term Care Insurance Sales and Senior Vice President of Leisure Werden & Terry, a brokerage general agency. With offices in Pasadena and San Francisco, California, the firm markets products of several major life and long-term care insurance companies. Mr. Donchey can be reached at [email protected].
J. Timothy Lynch, JD, CLU, ChFC
"The affluent don't need long term care insurance." "The wealthy can self-insure." "They're just throwing money away on long-term care insurance."
If you're a financial professional with a high-net-worth client base, traditional industry thinking has you believing these statements. Persuasive, yes. Especially if you've been conditioned over the years to pursue advanced planning strategies, business succession and retirement plans, or charitable giving to help maximize your clients' assets while minimizing taxes.
But the reality is you could be the one throwing away the money-and the opportunity to help your clients by overlooking long-term care insurance (LTCI) as a legitimate part of their financial and estate plan. Let's take a closer look at what we've previously been told about the wealthy and LTCI and how you can break past those barriers with new sales perspectives. (For purposes of this article, wealthy clients are those with assets over $5 million.)
The Typical LTCI Prospect Has Less Than $1 Million in Assets
Most insurance companies and many LTCI trainers encourage financial professionals to target prospects with estate values ranging from $75,000 to $750,000. Any less and it is thought that the client can't afford to pay the insurance premiums; any more and it is suggested that the client can self-insure.
The truth is that anyone who can afford the premiums should consider purchasing LTCI. That's right, anyone.
Of course, there are a number of important objective standards in measuring the financial suitability of a traditional LTCI prospect. The decision to consider the product is rather subjective and open to individual financial adviser interpretation, as well as buyer demand. For example, financially successful adult children may want to purchase LTCI for a parent who, without financial assistance, may not be able to otherwise afford the insurance. In this case, the...