For those pursuing LTC Insurance, there are many options available in the market - in fact too many options to compare them easily. That's why the role of an advisor is so critical in helping people plan for long-term care costs.

In our experience, advisors can fall into one of two traps.  First, they can provide a great deal of information on all the different options - and there are so many! This giving approach seems to be client friendly - but inevitably leads to decision paralysis.

Another mistake we see advisors making is leaning on their years of experience and telling the client what they should do. The problem with this approach is that it is subject to bias, may appear presumptive, and also may not result in the best solution. An example of this is when advisors may discount products such as traditional LTC Insurance because of past experience with rate increases - even though current products are much more conservatively priced.

A better approach is to help clients make sense of this complex issue. Advisors need to create a process to guide the client and prioritize simplicity over comprehensive details and minutia.

Before we get to our recommendations on how to walk people through the options, understand that there are four broad categories of LTC Insurance Solutions:

1. 1. Traditional (Health Insurance Based) Long-Term Care Insurance
2. 2. Hybrid Life + LTC Insurance
3. 3. Annuity + LTC Insurance protection
4. 4. Permanent Life Insurance with LTC Riders

For the purpose of this article, we will only be focusing on clients who would qualify for medically underwritten LTC Insurance. So, while people can purchase Chronic Illness Riders on Life policies or "annuity doublers" on annuities, neither of those options are medically underwritten and won't provide the same benefit of underwritten LTC Insurance.

Here's a chart with some of the options, along with the "default" self-funding options. We've listed the pros and cons of each solution.

This chart is for advisors. If you gave the chart below to a client, they would be completely confused.  However, LTC insurance is really not complicated - it's just unfamiliar to the buyer who hasn't looked at it.

Let's make everything simpler. Understand that there is a wide variety of plans available and instead focus on these four key steps to building an LTC Insurance Plan. These steps will also lead to insightful client discussions.

1. 1. How Much Coverage Should Your Clients Secure?
   
   There are many factors that go into how much coverage someone needs. You can use tools such as carrier cost of care surveys to think about care costs, such as this one from Carescout. Some companies, such as Waterlily, are creating tools for advisors to estimate future care costs based on a client questionnaire and projecting those costs using AI models.
2.  
3. Discussions with clients can include the difference between aging at home, assisted living costs and skilled nursing home costs, and regional care cost variations. Finally, an idea of what non-insurance sources of income and savings can be used to pay for care so that an appropriate level of coverage is decided upon.
4. 
   2. Growth rate on benefits?  
   
   Should the benefits increase over time? How much? There are several ways for policy values to grow -either through automatic inflation protection of various amounts or through the growth in the cash value of a policy. Do clients want the certainty of knowing exactly what their benefit will be at an older age using automatic fixed inflation adjustments, or will they feel comfortable with growth benefits being variable based on an Indexed Life or Annuity product?
   
   3. Money Back?  
   
   Should the plan include Life Insurance (death benefit), return of premium, or cash surrender value? Are they comfortable with the pure protection of traditional LTC coverage? Do they have legacy needs? How would using the life value for LTC impact that?
   
   4. How to fund it? 
   
   How should the policy be funded?  Single premiums or multiple? Funded from an existing policy through a 1035? Paid through a business with possible tax deductions? Using qualified money to pay premiums? There are many options for clients to fund a plan.
   
   Answering these questions will guide you to one of the 4 solutions above.  For example, here's a grid showing some answers to questions and possible product categories:
   
   

There are several ways to bring these questions into a LTC conversation. One LTC expert, Lisa Young of Rise Private Wealth Management, a private wealth advisory practice of Ameriprise Financial, LLC, uses a single page to compare Traditional, Life with Rider and Hybrid solutions for coverage. She's found her own comfortable way of explaining the concept to a client. Click the whiteboard image below to watch her video explanation. 

For a deeper dive, check out our recent April conference call entitled "say this, not that."

Thinking about aging and LTC seems overwhelming, but using a simplified approach should result in the best plan recommendations - and it is hard to put a price on the peace of mind and confidence LTC planning brings to families.