Home Life Insurance Behavioral Finance and Lengthy-Time period Care Planning

Behavioral Finance and Lengthy-Time period Care Planning

Behavioral Finance and Lengthy-Time period Care Planning

What You Have to Know

  • Restrict selections.
  • Inform tales.
  • Supply psychological shortchuts.

As a long-term care planning specialist, I’m all the time looking for methods to enhance my consumer conversations.

That’s why I used to be intrigued after I heard about an strategy based mostly on utilizing behavioral finance theories.

Many monetary companies professionals now use methods based mostly on the analysis when they’re serving to shoppers with retirement and 401(okay) planning.

Behavioral Finance Fundamentals

Behavioral finance examines the psychological and emotional components that affect monetary decision-making.

The researchers who work in that space mix psychology, economics and finance in an effort to grasp how folks make choices about cash.

The analysis positively impacts the insurance coverage trade, as a result of the choice to purchase a coverage is commonly influenced by a wide range of behavioral biases.

The Customers’ Handbook

Steve Cain, nationwide gross sales chief at LTCI Companions, has digested educational research, books and years of conversations with behavioral finance researchers into seven suggestions for advisors who’re speaking to shoppers about long-term care planning.

T1. Preserve the alternatives so simple as attainable.

Simplify and restrict the alternatives. That is based mostly on an idea referred to as “alternative structure.” Researchers discovered that, when persons are offered with complicated and sometimes provided advantages, they do nothing. We’re conditioned to purchase issues in a “good-better-best” format.

2. Concentrate on the attainable acquire versus the potential loss.

We’ve seen by means of the trade’s market penetration that worry and spewing statistics don’t change conduct. They don’t inspire folks to take motion.

Contemplate going the opposite route: Be optimistic. Concentrate on the positive aspects vs. losses, or the potential value of a long-term care occasion. Inform your prospect or consumer what they acquire by planning with long-term care insurance coverage. “For those who safe long-term care insurance coverage at this time…”

  • You’re securing peace of thoughts.
  • You can be cared for in your phrases.
  • You’re locking in your well being, your age and insurability.
  • You’re gaining a tax-free funding technique for care.
  • In the present day, the price of care is $6,000 a month; and, when, you want it, the associated fee will doubtless have elevated to $12,000 a month.
  • In the present day, you have got a complete of $250,000 of advantages. That might be price over $500,000 if you want it.

3. Body the dialog rigorously.

Take into consideration whether or not your consumer desires a dialog about caregiving or a dialog about asset safety.

Begin with: “I’m delicate to your time. What motivated you to have this dialog?”


“Earlier than we get going, I’m curious. How did this come up? Was it due to a private expertise, or did your advisor inform you that you must look into this?”

4. Use tales, not statistics.

Statistics destroy empathy and create debate.