Sales Idea: Use Hybrid Long-Term Care Insurance as an Estate-Planning Tool

  • Originally published October 22, 2018 , last updated October 24, 2018
Sales Idea: Use Hybrid Long-Term Care Insurance as an Estate-Planning Tool

The increasing consumer appeal of newly designed long-term care (LTC) insurance is creating opportunities for insurance and retirement planning professionals, and new technology is showing consumers how LTC insurance can be used for more than just long-term care — it can be used to protect their estates.

The Wall Street Journal recently reported that hybrid products are reshaping the long-term-care niche of the U.S. insurance industry just as it had appeared headed for obsolescence. The article, titled “Long-Term-Care Insurance Isn’t Dead: It’s Now an Estate-Planning Tool,” explains how hybrid long-term care (LTC) policies — which combine LTC coverage and life insurance benefits — are increasingly popular with affluent Americans. The uptick is due in part to new product designs that allow an unused LTC benefit to be paid out to heirs in a death benefit, guarantee that premium rates won’t increase and provide some of the original death benefit even if the LTC proceeds are fully tapped.

Thanks to these selling points — especially the elimination of the “use or lose it” element — life combination product premium has increased by double-digits in four of the last five years, Elaine Tumicki, corporate vice president and director of LIMRA Product Research, said in a LIMRA news release on its 2017 Individual Life Combination Products Annual Review.

Selling LTC Hybrids Is Getting Easier

“Our consumer research finds more than a third of U.S. consumers said they would consider a combination product because no matter the circumstances they or their beneficiaries would benefit,” Tumicki said.

For insurance and financial planning professionals, these product changes make selling LTC insurance easier. You can position hybrid LTC insurance premiums as an investment, rather than a cost, to protect retirement funds. As the numbers show, it’s an idea that’s resonating with consumers, who are hearing more in the news about dementia, longer life expectancies, rising health care costs and the emotional and financial burden of caregiving on family.

The Most Effective Tool for Hybrid LTC Insurance Sales

Income ArchiTech™, a new all-in-one-planning tool by Senior Market Sales® (SMS), can show the impact of an extended-care event on your clients’ retirement income and how a hybrid LTC policy could be a versatile solution to all the consumer concerns that are at the heart of estate planning.

“I’ve never seen a tool this effective at educating consumers on the need for LTC insurance, and I’ve been in the industry for more than 30 years,” said Jackie Slaughter, SMS’ Associate Director of Long-Term Care. “Income ArchiTech is here at the perfect time, because it helps producers show clients how these hybrids are not your traditional LTC products. In addition, you’re using clients’ real assets and planned income — not generic or hypothetical John Doe scenarios — and illustrating how long-term care could eat into those funds, so it really sinks in just how expensive long-term care really is.”

But even more effective, Slaughter said, is that the tool shows clients how a hybrid LTC policy can help avoid the devastation or how it can pay a death benefit to an heir even when the LTC benefit is exhausted. The tool helps you overcome the objections that made LTC sales so challenging in recent times, she said.

Show Traditional Vs. Hybrid

While traditional LTC insurance still can serve some client needs, that segment is being eclipsed by the popularity of hybrid LTC products surges. According to LIMRA, traditional LTC insurance policy sales have fallen 60% since 2012. In 2016, the most recent year of available data, 91,000 traditional LTC policies were sold, compared to 256,000 combination life policies sold. (In 2012, the number of hybrids sold was just 86,000.)

Income ArchiTech can show how a traditional LTC insurance policy would impact a client’s estate, too. The tool’s stress tests also show clients how other risks — from longevity to the sequence of returns — can impact their retirement income, positioning you to provide the solution. Income ArchiTech compares those solutions to the client’s scenario without them, using easy-to-understand graphics.

See Income ArchiTech in Action

Want to see this powerful tool in action? Watch the demo.

If you would like to discuss how you can start using Income ArchiTech, call an SMS Marketing Consultant at 1.800.786.5566. If you’re interested in discussing how SMS can support your LTC business, call 1.888. 456.8884.