Here are some of the most common mistakes people make when creating their Long-Term Care Plan:
1. Purchasing a traditional Long-Term Care Plan instead of a modern plan (commonly called asset based, hybrid, or linked benefit plans)
Nobody wants a plan that has no benefits if you die or a plan that has constant premium increases.
In fact, most prospects want to work with a Long-Term Care planner so they DON’T have to plan again.
2. Going through underwriting for a Long-Term Care insurance policy when there is no chance they will ever qualify for the coverage.
One of the things I stress to prospects is to be up front about their health conditions.
Because some long-term care advisors forget to ask some simple questions about their prospects health, they waste everyone’s time.
There is a solution if you have an underlying health issue that will prevent you from purchasing coverage.
Long-Term Care annuities can provide long-term care benefits without any sort of underwriting.
You see, there is always more than one way to make a plan!
3. Purchasing a Long-Term Care Plan that is a Reimbursement Plan rather than an Indemnity Plan
So, you’ve never been informed about the difference between Reimbursement and Indemnity?
INDEMNITY PLANS pay you a cash benefit every month and you can spend it on whatever you want: home modifications to keep you in your home longer, pay a family member to help take of you, or choose the facility that you prefer. There is so much more flexibility and choice for a long-term care plan that has an indemnity payout.
A REIMBURSEMENT PLAN will only pay (reimburse) for what expenses you actually incur for a qualified expense. So, you can only be taken care of in your home by a “qualified” healthcare person. You can only choose a facility that is “qualified” to give you care.
4. Waiting too long to plan for Long-Term Care
Rates are based on age and health. The younger you are, the lower premiums generally will be.
Also, the older you get, the more likely you are to have health concerns that make you uninsurable or would make coverage more costly.
5. Purchasing a lifetime pay as you go plan, when you could have had it paid up in a single premium, 5 pay plan, or 10 pay plan.
This one bugs me.
Advisors will sometime forget to ask a family that is planning for long-term care. Would you like to pay for this for the rest of your lifetime, or do you have an asset sitting around that could be repositioned to play for long-term care in one payment, or 5 annual payments, or 10 years worth of monthly premiums.
There are multiple payment options for Long-Term Care plans.
It’s goofy to not inform a client of this.
I mean, you may have a $100,000 CD in the bank earning less than 2% than could be easily used to fund an Asset Based long-term care plan.
Yet, financial advisors do not spend the proper amount of time analyzing their clients needs and wants… typically because some “guru” told them they need to pay for long-term care for the rest of their lives.