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Category: Leads · 3 min read

Why You Shouldn’t Forget About Your Clients’ Health Care

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on October 24, 2019

author profile photo

on October 24, 2019

Professional looking at tablet screen with a client

If you are meeting with prospects and clients and not talking to them about their health care in retirement, you may be missing out on a big sales opportunity.  

Here’s the deal: health care and medical costs have risen so much that a couple that retires at age 65 will pay more than $387,000 in medical costs over the rest of their life.1 Other research estimates that an average 65-year-old woman will have to pay $5,200 for health care costs every year.

That’s something that needs to be brought up with your clients as they make important financial decisions about their retirement.  

Even if your clients are in perfect health now, who knows when that may change. According to the Social Security Administration, on average, men who are 65 will live to age 84 and women who are 65 will live to age 86.5.3 Plus, one in three 65-year-olds will live past age 90, and one in seven will live past age 95.

These age averages show that we’re living longer than we used to, thanks to medical advancements and technology. This means that your clients’ retirement savings and income needs to last longer, too. So, help them prepare their finances for a long life in retirement.  

How do you do that? Here are two ways I think can help.  

Here’s the deal: health care and medical costs have risen so much that a couple that retires at age 65 will pay more than $387,000 in medical costs over the rest of their life.1

Long-Term Care Insurance 

Because people are living longer, they’re also needing more long-term care. A 2018 study by the Moll Law Group, a personal injury firm, found that 70 percent of people will need long-term care, but only 46 percent think they’ll need it.4 They also discovered without long-term care insurance, the out-of-pocket cost for long-term care is more than $47,000 over a person’s lifetime.4 And that money is usually taken from retirement savings.  

So, it may be worth it for your clients to purchase long-term care insurance to help avoid those extra expenses and keep their retirement savings intact. Because their savings won’t be used for long-term care, they can still have their independence and don’t have to reach out to their family or friends for financial support.  

It’s no secret that talking about long-term care and getting old may be uncomfortable or unnerving for your prospects and clients. It’s not easy talking about health failure. But it’s a conversation that’s worth having, to help your clients realize that there’s something they can do about it now to help protect their future health.  

 

Guaranteed Income/Annuities 

The harsh truth is that Medicare doesn’t cover everything. It doesn’t include dental, vision, any hearing conditions, or long-term care. Plus, the services it does cover usually require a deductible, coinsurance, or copayments. Your clients will most likely have to pay for their health care out of their own savings at some point.  

While Health Savings Accounts (HSAs) can be beneficial for this, perhaps even more helpful is guaranteed income. Setting your clients up with a consistent amount of income for the rest of their life is a great way for them to plan and prepare for health care costs. Annuities are a key piece of the retirement puzzle because they offer guaranteed income, which is rare. Annuities aren’t for everyone, but they should be an option and be considered if the situation allows.  

Setting your clients up with a consistent amount of income for the rest of their life is a great way for them to plan and prepare for health care costs.

The truth is that health care costs aren’t going away for your prospects and clients. They’re going to play a part in their retirement, whether they’re ready for them or not. So, have the health care conversation with your clients, and help them realize that they need to start preparing now for what’s to come.  

 

Sources: 

1. Sergeant, Jacqueline. “U.S. Couples Retiring at 65 Will Pay $387K In Medical Costs, Report Says.” Financial Advisor. Jul. 15, 2019. https://www.fa-mag.com/news/a-couple-retiring-this-year-at-65-can-expect-to-pay--387k-in-medical-costs--report-says-50537.html?section=43 

2. Vanguard. “Planning for health care costs in retirement. Jun 2018. https://pressroom.vanguard.com/nonindexed/Research-Planning-for-healthcare-costs-in-retirement_061918.pdf 

3. Social Security Administration. “Benefits Planner | Life Expectancy.” 2019. https://www.ssa.gov/planners/lifeexpectancy.html 

4. Moll Law Group. “The Cost of Long-Term Care.” 2018. https://www.molllawgroup.com/the-cost-of-long-term-care.html 

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Written By

Mark Williams

President and CEO

Mark Williams is the President/CEO of Brokers International. Over his more than 25 years of financial services experience, Mark has been both a producing independent agent in the field and a home office leader consulting to agencies and field marketing organizations. Currently, Mark is focused on the future of the insurance industry, from the disruptions of InsurTech and robo-advisors to the changing demographics and needs of customers. He also is an avid mentor, helping financial professionals navigate the industry.

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