Long-Term Care
Countering Misconceptions about LTC insurance
by Derrick Brickhouse
More people are realizing the value of long-term care insurance, but agents still hear objections from prospects who don’t think they need coverage for their potential long-term care needs. Agents who are prepared to counter those excuses with solid information will gain their clients’ trust and increase their chances of selling policies. Here are some common misperceptions about long-term care insurance and ways that agents can respond.
Client: Long-term care insurance is for nursing homes. I’m never going there.
Agent: A lot of people feel that way. A comprehensive long-term care insurance policy can actually help you avoid a nursing home because it will provide benefits for a variety of long-term care services, should you ever need them. That means you retain more control over your care and where it’s provided -- even in your own home. In fact, nearly two-thirds of the $3.3 billion paid in long-term care claims in 2006 were for care provided in places other than nursing homes.
Client: I’ll transfer my assets and have Medicaid foot the bill.
Agent: The Deficit Reduction Act severely restricts the loopholes some people used in the past to hide or transfer assets to qualify for Medicaid. Even if you qualify for Medicaid, federal law allows for the recovery of Medicaid-paid benefits from the beneficiary’s estate, so your spouse and other heirs could end up paying anyway. In addition, Medicaid benefits are limited and may leave you with little or no control over your care or where it’s provided.
Client: Medicare will pay for my long-term care expenses.
Agent: Although Medicare does provide major medical coverage for those over 65, it provides very little in terms of benefits for long-term care. It pays only about 12% for short-term skilled nursing home care following hospitalization. (America’s Health Insurance Plans). Medicare pays for some skilled at-home care, but only for short-term unstable medical conditions and not for the ongoing assistance that many elderly, ill, or injured people need.
Client: I already have disability insurance.
Agent: Disability insurance will replace a portion of your salary to help pay your mortgage and other monthly bills in the event you are no longer able to work, but it is also important to protect your assets from the high cost of your care. Your disability insurance might not cover the skilled care you could need in the event that you are severely injured.
Client: Long-term care insurance is too expensive.
Agent: As with all forms of insurance, long-term care insurance premiums are based on the amount of risk involved. Because it is one of the most-used forms of insurance, the premiums may seem high – until you put them in perspective. The American Council of Life Insurers estimates that a 60-year-old today would pay about $1,767 a year for a comprehensive long-term care policy. That’s $4.84 a day. Meanwhile, we know the average daily rate today for a nursing home is $206. For an assisted living facility, it is $98. An eight-hour visit by a home health aide averages $152. (MetLife Mature Market Institute) So based on these numbers, it’s like paying $5 a day now to ensure that you don’t have to pay $100 to $200 a day.
Client: I have some health issues. I doubt I can qualify for coverage.
Agent: Underwriting guidelines vary among insurers. Some companies will provide coverage for many pre-existing conditions, including cancer, emphysema, heart disease, and osteoporosis. If you are concerned that your health might disqualify you, consider a policy from an insurance company that uses a broad range of underwriting classes. A company like this can often offer coverage even to someone who has been declined by other companies.
Client: My children will take care of me.
Agent: Providing for a loved one’s long-term care needs can be very time consuming and can cause a great physical, financial, and emotional strain on the caregiver. It’s a huge responsibility and one most people prefer not to leave to their children. For example, did you know that two-thirds of caregivers report having to rearrange their work schedules, decrease their hours, or take an unpaid leave in order to meet their care giving responsibilities? (Family Caregiver Alliance) Should the need for long-term care arise, could your family really afford the time and financial cost that’s typically required to be a caregiver?
Client: I’m too young for long-term care insurance.
Agent: A debilitating illness or accident can happen at any age. In fact, 40% of the 13 million Americans receiving LTC benefits are between the ages of 18 and 64. (AHIP) It is best to secure coverage for yourself while you are young and healthy. Plus, premiums are based on your age and health at the time you apply for coverage, so the younger and healthier you are when you get the protection, the more affordable it can be.
By anticipating objections and having answers at hand, you will see excuses evaporate and sales increase.
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Derrick Brickhouse is vice president of Sales & Marketing, Penn Treaty Network America. For more information, call 800-222-3469.
