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Optimal LTCI Plans

Boost your long-term care sales by helping your client choose the policy that is right for him.

By Wilma G. Anderson

When you craft a long-term-care insurance (LTCI) plan to meet your client’s or prospect’s needs and desires, you offer appropriate insurance protection he can afford, you increase your closing rate markedly, and because your plan meets his needs, your happy new client will gladly refer you to his friends.

People in different age brackets and circumstances have different needs and respond positively to different features—from an emotional and a rational point of view. And while some clients may know what they want, most don’t. So you need to take the lead.

While LTCI is still mostly bought by the 65-plus crowd, more people in their early 60s, 50s and even 40s are concerned about their financial risk for long-term care. Educate them that the safest choice is to buy insurance now, while their health is good and they can still health-qualify for insurance.

For your prospects in their 40s or early 50s, it’s a more challenging sale because they don’t see an immediate need. So ask about their parents and grandparents. How long did they live? Are any still living? Have they needed care? This will help make the issue more real to them—especially if their relatives tend to live to a ripe old age.

Because the base premium is lower for younger clients than for people in their 70s, younger clients and prospects can afford a feature-rich policy. Some valuable features add surprisingly little cost, and one of the most important is an unlimited benefit period. At younger issue ages, the difference in cost between a three-year benefit and an unlimited benefit is minimal, so always recommend the latter. You can point out that while the odds are that they’ll use their benefits in old age, anything can happen to anyone at anytime. Healthy people can be struck down by an accident at any age, and the incidence of chronic diseases rises sharply for people in their 50s. Your clients won’t want to run out of benefits, especially if they’re going to live another 20, 30 or more years. Also, people who have a limited policy might be afraid to start using their benefits because they feel they have to save them for later.

Another crucial feature for younger buyers is compound inflation protection. A typical plan offers 5 percent, compounded annually. Another option indexes benefit increases to the Consumer Price Index.

Inflation protection is a must because it’s impossible to predict what care might cost 20 or 30 years from now. I normally add a compound inflation rider for buyers up to age 65.

Having no elimination period (0 days) is also well worth obtaining and is affordable at younger ages. Again, the goal is risk control. Many years from now, 30, 60 or more days of care will be very expensive.

Younger buyers often object, “What if I pay premiums for years and never use the insurance?” Remind them that they may have paid premiums on their auto insurance for lots of years, too. It’s all about peace of mind when they submit claims. Another alternative is to show them the return-of-premium rider. If the insured has not used any benefits before his death, the insurer will return a portion of the premium to the beneficiary. The rider is available only on policies purchased by age 65.

A survivorship benefit is attractive to couples. This option will pay the surviving spouse’s premiums for the rest of his life, as long as he has owned the policy for 10 years and has not made any claims. The rider must be purchased before age 65 and typically costs just 5 percent extra. Some insurers include the feature automatically in all newly issued policies.

With younger buyers, discuss a 10-pay policy that’s fully paid up after 10 years. A 55-year-old, for example, can buy the policy and be done paying premiums by normal retirement age. It’s also an appealing feature for business owners because LTCI premiums are now 100 percent deductible as a business expense. The benefit doesn’t have to be offered to all employees; it can be carved out for the just the owner, and, if desired, key managers.

Age 66 to early 70s
Plan design here involves a balancing act between desirable features and available funds. While an unlimited benefit period with full inflation protection is ideal, past the age of 65, these features start to cost considerably more.

I usually recommend simple inflation protection for this age bracket. Since they will probably use their benefits within 10 to 15 years, simple inflation provides adequate protection at a lower cost than a compound inflation feature. (Some states do not allow simple inflation, only a compound inflation rider, so be sure to check beforehand.)

Another reasonable compromise is a shorter benefit period because an unlimited benefit can add considerable expense to their budget at this age. On average, men choose a three-year benefit, while women, who expect to outlive their husbands and want to ensure they will be taken care of, prefer unlimited benefits. However, men who come from long-lived families may want to get unlimited coverage. It’s best to illustrate different benefit periods and let your clients choose.

The restoration of benefits rider is a valuable feature for people who select a limited benefit period. This means that if the insured starts collecting benefits, then recovers and is treatment-free for at least six months, the policy benefits will be restored to the original provision when it was issued. Some policies from the large carriers include this automatically; some charge about 5 percent extra for it.

Mid-70s and beyond
People in this age group are the most ready to buy LTCI. They realize they must make a decision before their health declines and they can’t get insurance.

However, higher premiums can cause sticker shock. Older clients can save money by declining inflation protection. Since they’re likely to use their benefits relatively soon, this isn’t too risky, provided they start out with a higher daily benefit, such as $200 to $300 a day. Again, illustrate both limited-pay plans and unlimited benefit periods, show the costs with and without the inflation rider, and help the client make a good decision.

Suggesting a long elimination period can backfire. For example, a 90-day elimination period may save money up front, but it’s risky. If another agent has suggested a 90-day period, you might ask, “Did the other agent tell you that if Medicare doesn’t pay for any long-term care benefits, you could have a $15,000 deductible today?” And point out that health-care costs are sure to go up.

With a lower elimination period, the client would have to pay for 20 or 30 days out-of-pocket if Medicare does not pay for anything. To self-insure that deductible, your clients can use annuities (fixed-rate or equity-indexed) to help their money work harder, tax-deferred.

Wilma G. Anderson, known as The LTC Coach, is a leading LTCI sales trainer and a practicing producer in Littleton, Colo. She offers sales and training solutions for the insurance industry. She can be reached at 720-344-0312 or

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