The title of this Blog is a quote from Derek Bok, President of Harvard from 1971 to 1991.
Let me rephrase it in an insurance context:
If You Think LTC insurance Is Expensive, Try Self-Insuring
Why is LTC insurance viewed as so expensive that many people would rather self-insure it? It’s because the typical sales presentation assumes it will be purchased from income thereby reducing a client’s cash flow. If it is instead presented as purchased using withdrawals from assets, and if overall assets end up greater because it is acquired, it can’t be viewed as the expensive option, can it?
To review the mathematics behind this logic, read Blog #6: How to Prove Which of Your Clients Should Purchase Long-Term Care Insurance.
“Would you like to know mathematically whether self-insuring LTC is a valid option?” is a very compelling question to ask people of means who believe in self-insuring LTC. This question is so powerful that it is pretty easy to get a prospect to reveal comprehensive details of the financial data needed to develop the evaluation examined in Blog 6.
This produces another advantage related to the presentation, particularly if it is made to a new prospect. Once you finish the discussion of the results of your study, whether LTC insurance is purchased or not, you now have a detailed data base of your prospect’s net worth. The obvious next step is to integrate other wealth planning concepts into a new presentation without the often hard first step of convincing a new prospect to reveal personal financial details -- you already have all that information.
Since you’ve been successful in enhancing net worth with your LTC evaluation, you likely have these additional resources available for new concepts you introduce -- perhaps gifts to heirs or charity or funding the tax cost to convert a large IRA or 401(k) to a Roth or maybe the source for loan interest payments for a premium financing arrangement. With funding “found” by your LTC calculations, the possibilities are endless.
Good luck and good selling.
