What Can Help Clients See the Long-Term Care Cost Threat? Science

What You Need to Know

Depositors ran to get money out of Silicon Valley Bank Friday.
Clients scramble for cash to pay for care for themselves or their loved ones every month.
Long-term care planners struggle to get clients to run to protect themselves against a personal financial disaster.
One Jeff Kreisler recommendation: Talk more about the present than the future.

Long-term care planners can help clients plan for a high-probability threat — huge long-term care bills — by talking about how taking action now can improve their safety and security today, Jeff Kreisler said Monday in Denver.

Kreisler, the head of behavioral science at JPMorgan Chase, was the keynote speaker at the 2023 Intercompany Long-Term Care Insurance Conference.

When an LTC planner is talking to a client, “take 10 seconds and ask, ‘Who is this person?’” Kreisler advised us attendees. “Don’t focus on money, legal documents or health. Instead think about what motivates them…  Focus more on what they want instead of what you offer.”

Kreisler also recommended that a planner work with a client to build an LTC plan, rather than presenting a fully developed plan, to take advantage of the “Ikea effect.”

“When you are part of building something, you value it more,” Kreisler said.

What It Means

Our typical client is much more likely to take a big financial hit from long-term care bills than to lose money as the result of a bank failure.

The question is: How do we get clients to run to protect themselves against a common threat that’s already visible as quickly as depositors did to pull deposits from Silicon Valley Bank March 10?

Kreisler says learning about behavioral science research can help.

Long-Term Care Risk

The United States spent about $317 billion on nursing home care, retirement community care and home health care in 2022, according to the Office of the Actuary at the Centers for Medicare & Medicaid Services.

We in the long-term care insurance community have been working for decades to persuade clients to plan ahead to pay for their own long-term care costs, but the American Association for Long-Term Care estimates that insurers paid out only about $13 billion in LTC benefits in 2022.

A simple assisted living facility room may cost about $5,000 per month, a room for a patient with moderate to severe dementia could cost more than $7,000 per month, and a high-quality nursing home room may cost $10,000 per month.

The bills for patients who need care for five years or more can be high enough to shock all but ultra-high-net-worth clients.

The ILTCI Conference

The long-term care division of the Society of Actuaries began organizing the ILTCI conferences in 2005. A nonprofit ILTCI Association now runs the conferences.

COVID-19 forced the cancellation of the 2020 conference, and it forced the association to hold the 2021 conference online.

Last year, the association managed to attract about 700 people to an in-person conference in Raleigh, North Carolina.