A passion for LTCI drives the depth of knowledge forward, not the training facilities available, says Brian Fisher
The subject of whether specialist training or examinations are necessary to demonstrate knowledge is a tricky one.
Training manuals will tell you that, on average, only 20% of information will be retained 24 hours after a training intervention. In the end, it depends on how important the knowledge is to the individual. If you have a passion for anything, whether it is football, ornithology or long term care insurance (LTCI), the passion drives the depth of knowledge, rather than the training available. And this, of course, is what has caused the development of specialism among advisers.
Pre-funded LTCI policies are really only private medical insurance policies that last for life. An adviser needs to know the available State benefits, the extent of any potential local authority or NHS support, the likely financial need of the client, the features and benefits of the various products available from each provider and the underwriting criteria. One could argue it is the same as for any other protection policy.
Immediate needs LTC policies are different altogether. Here, a little knowledge can be dangerous. An adviser is dealing with the complexities of a wide range of inter-linked legislation and its interpretation by any given local authority.
It may be stating the obvious, but the advice is, as the name suggests, for an immediate need and recommending a strategy to be reviewed, as with investments, may not be the ideal solution.
The advice is also being given at an emotional time for both the client and their family and usually involves a considerable premium ' which the family may see as part of their inheritance. Consequently the depth of knowledge and understanding of products necessary to give any advice at all in this area is immense. The wrong advice can be costly ' and not just to the client.
I recently heard of an adviser who proposed an immediate care plan on the life of a client's wife who was in a care home. Her fees were partially funded by the local authority, but topped up by the client's son. The client held enduring power of attorney over his wife's affairs and wanted to relieve his son of the ongoing financial burden by taking out the immediate care plan for the amount of the contracted top-up. The client used his own money to pay the premium but signed the policy document as his wife's attorney. Could you confidently explain the problem with this?
The future needs of LTC advice covers a range of strategies ' not just an insurance solution. It also impacts on Inheritance Tax mitigation and with full regulation of LTCI on the horizon, a full understanding of the subject, together with the implications and possible consequences of any strategy, is crucial.
The main LTCI product providers can help provide the specialist training and offer technical support where necessary. And the accepted way to demonstrate expertise is through a specialist qualification.
