Helping clients plan for long-term care can be a very complex job - but there are some simple steps that can help make it easier for the advisor and their clients. For inspiration, let's consider a business completely different than financial services - the fast food business and how their restaurants help people make decisions. Specifically, let's consider how the Chipotle menu system can teach us lessons for LTC planning.
Despite some of their well documented recent problems, Chipotle remains a very successful business. One of their claims to fame is the amount of customization that is available to customers. In fact, it's said you can order Chipotle more than 60,000 ways!
Despite the overwhelming number of choices, the menu at Chipotle doesn't run several hundred pages long. Instead, there is a simple process to ordering- you make a series of small choices that allows you to build your perfect burrito, taco, or bowl. The series of decisions, such as choosing a meat or veggies, isn't too difficult and you end up with exactly what you want.
That level of customization is also available in planning for long-term care and buying LTC Insurance. You can end up with endless options for paying for care; from standalone coverage to self-insuring, life Insurance with LTC riders to combination Life LTC. On top of all that, of course, any of these options are available from multiple carriers - with each carrier having multiple options!
The book The Paradox of Choice by Barry Schwartz describes some of the challenges facing today's consumer. Anyone who has ever shopped for cold medicine understands the feeling - an entire row of tablets, liquids, pills in all shapes, sizes and costs that are trying to accomplish the same thing.
Imagine you've decided you'd like to plan for the cost of long-term care by shopping for insurance. Now imagine a Costco- sized supermarket but instead of grocery items each shelf holds a different type of Insurance used to plan for LTC. Some shelves have stand-alone LTC products, some have single premium life/LTC products, and others have life insurance with LTC riders. Assuming there was an employee in the store to help you, one of two things would probably happen:
1) You'd be so confused you would hightail it out of the store.
2) You'd rely solely on the opinion of the employee who would pick a plan for you.
Of course, the second outcome is better than the first - you end up with something to protect your savings, lifestyle, and family. Even so, how would you know the choice recommended to you was the right one? Did you have any sense of control in the buying process? Would you recommend that others do it this way?
Most people wouldn't. However, there is a better way to plan, one that combines the possibility of many outcomes with the simplicity of just a few choices. The strategy works by "grouping" the choices into categories so that instead of having to choose between many, many options you choose between a maximum of three options - and then take the next step.
How would this work? Here's a menu board for LTC Planning with 5 categories of questions. Each category has at the most three different choices. Let's take a look how one approach would look:
| Decision 1: Are you ready to start planning in the next three months? | Decision 2: Do you want to plan using health underwritten insurance or self-insure? | Decision 3: What form of long-term care insurance would you like? | Decision 4: What carrier would you like to select? | Decision 5: What level of plan benefits? |
| Yes | Insurance | Standalone LTC | John Hancock | Good |
| No | Self-Insure - identify assets to be used for plan | Linked Life/LTC | Genworth | Better |
| Life Insurance with LTC Rider | Mutual of Omaha | Best |
Let's venture back into our imaginary LTC Planning "supermarket" with the addition of a menu board like the one above. Now a single associate could guide you through these series of choices to the best product and as a buyer you would feel the process made sense. A little more detail around the decisions:
Decision 1: Planning for LTC is never a priority. Getting someone to commit to planning with a deadline will create a sense of urgency. The question of "why should I even plan" allows for a conversation on that topic.
Decision 2: Bring the issue of health underwriting into the conversation early. Being healthy enough to buy coverage should be looked at as an opportunity, not a burden. Good health can be translated into a financial asset.
Decision 3: Three broad categories of products each have their own fit. It is critical to pick a insurance category before you look at particular carriers. The carriers will be dependent upon that choice.
Decision 4: Choose the carrier based on benefits, not premiums. The actuarial assumptions and pricing for carriers are now very similar, but benefits will vary.
Decision 5: After the carrier is selected, than decide on a plan that will fit a budget.
Of course, the stakes in planning for health care are much greater than what Burrito someone buys. And, the amount of decisions involved in making the purchase will end up be many more than this.
However, human nature means that a complex, one time buying decision like LTC requires a process to make it happen. By categorizing the decisions, that buying experience can be a lot better.
Want to learn about the true cost of an LTC Event? Click the button below to view an illustrated guide.
