Thrivent Financial for Lutherans started offering its own long-term care insurance last year, coming back into a market that other big insurers have exited.
It’s done well with its product, selling it based on a very simple idea. Before talking insurance policies, Thrivent advisers say to clients, shouldn’t we talk through who you would like to take care of you, and where, should the day come when you can no longer manage on your own?
Thrivent is creating new marketing materials right now that will emphasize what it has been training its advisers to do, and that’s help clients talk through that scenario, and what all of the consequences will be for their families.
Thrivent is a fraternal benefit company that calls clients “members” and its staffers unfailingly talk about helping them have a healthy and secure life. But its approach to long-term care seems savvy as a sales strategy, too. What Thrivent is competing against is not cheaper quotes for policies offered by other companies so much as having its members do nothing.
Thrivent product manager Dean Anderson used the term “extended care” and discussed an insurance policy called long-term care insurance. Extended care is what you get when you need help with daily life, such as eating, dressing and getting around.
Long-term care insurance is something you buy from an insurance company to one day pay some or all of the costs of buying extended care services.
Thrivent’s idea of an in-depth conversation is when the client is asked to carefully consider the scenario that he or she lives long enough to someday need help with the basic activities of daily life.
That may sound like pure backhanded sales, as conversations probably roll around to insurance. Maybe, but that kind of discussion mostly seems to get at the basic idea of why buy insurance in the first place, and that’s to manage a specific risk. Better to get a handle on how much the real unfunded risk is.
Many clients have at least a rough financial plan, but usually one that Gwenn Branstad, a Thrivent Financial adviser working in Edina, called “the primrose plan.”
“You live a long healthy life and then drop dead, as promised, at age 90,” Branstad said. “That is how financial plans are built. It really does help people when you do a full plan that includes planning for the possibility that you will need extended care.”
So, Branstad and her colleagues may ask where a client would like to receive any care should the need one day arise. Most will say in a home setting, preferably their own house. OK, great, so who is going to be there every day providing it? Here is where the conversation turns serious.
Bathing and feeding and moving someone can be hard work that can take all day. Is your daughter going to quit her job? The same daughter who also has school-age kids?
It’s common for clients to then start planning to buy any necessary care, and that can very quickly become very expensive. In the Genworth 2012 Cost of Care Survey, the median annual cost for a semiprivate room in a Twin Cities nursing home was found to be just over $81,500 per year.
Faced with that kind of potential cash need, there are really just two alternatives to buying long-term care insurance. One is to have enough money saved to feel secure should a nursing home or other care services be needed, and the other is to spend down all of the savings and qualify for a government program.
So how big is the risk? The economists Jeffrey Brown of the University of Illinois and Amy Finkelstein of MIT suggested that between 35 percent and half of today’s 65-year-olds will someday use a nursing home. Of those, 10 percent to 20 percent will stay for more than five years.
Five years at more than $80,000 per year, the economists wrote in a 2011 report, “is exactly the sort of large, uncertain expenditure risk for which insurance would seem to be most valuable.”
Insurance has to be underwritten, Branstad pointed out, and if a client gets turned down she moves on to helping identify the assets that could be available to pay for care.
There are other companies that go to the market with an approach similar to Thrivent’s — Anderson mentions Northwestern Mutual as an example — but he said that most competitors still seem to prefer pitching long-term care insurance as another financial product.
Thrivent’s efforts since re-entering the market with its own product in September have gone well, as the company expects to be in the top 10 providers of long-term care insurance this year. And, Anderson said, “the lion’s share of our advisers have the discussion with their clients. Whether insurance is the solution or not is beside the point. It’s having a plan in place.
“As you know, having a discussion about extended care planning or long-term care is not a favorite conversation of a lot of people,” he continued. “It’s a must-have conversation.”