One of the most misunderstood aspects of Long-Term Care planning is underwriting because it is seen as a product-driven hurdle after a recommendation is made.  The reality, though, is quite different since evaluating a client’s health profile is not a product step, but rather a fact-finding obligation that should occur before any recommendation is considered.

Why This Step Exists Beyond Insurance

Regulatory frameworks already require advisors to gather all information necessary to understand a client’s time horizon, liquidity needs, risk exposure, and ability to withstand adverse outcomes.  Each of these variables is directly influenced by health status, functional longevity, and the probability of needing assistance later in life, and ignoring those inputs does not eliminate the risk.  It simply leaves the risk unidentified, unmeasured, and unmanaged, making a client’s health trajectory a financially material variable and not a medical curiosity.

Alignment With Existing Standards

Know Your Client (KYC) requires a reasonable understanding of factors that affect a client’s financial decisions and outcomes, and health events are among the most significant drivers of unexpected withdrawals, portfolio liquidation, changes in residence, tax acceleration, and family financial dependency.  A planning process that omits this discussion is relying on assumptions rather than client-specific knowledge.

Regulation Best Interest (Reg BI) obligations require evaluating reasonably foreseeable risks, and the loss of independence or cognitive decline necessitating the need for extended care is statistically common, financially severe, non-diversifiable, and non-market correlated.  As such, health must be considered alongside market, longevity, and inflation risks when forming recommendations.

Fiduciary Duty & The Prudent Process Standard requires the assessment of any/all risks that could materially impair the client’s plan.  Health-driven loss of independence represents an unfunded liability exposure that can override otherwise sound investment, tax, and estate strategies, and documenting this risk is simply fulfilling the obligation to understand the client’s full financial reality.

What This Means For The Advisory Community

A Health & Longevity Risk Assessment is a necessary, organized way to gather relevant planning data, such as:

• Current health conditions that may influence future care needs

• Family health patterns that affect planning horizons

• Functional independence expectations

• Existing support structures (spouse, children, geography)

• Prior medical events that may impact solution availability

These factors influence planning recommendations regardless of whether insurance is ultimately used, and they must be evaluated before any plan design discussion begins, with the same considerations applying to portfolios intended to self-fund care, retirement income strategies, tax planning, estate structures, and distribution sequencing.

Any approach that assumes assets alone will address a future care event—without first assessing the likelihood, timing, and financial impact of that event—is relying on an unexamined assumption rather than a documented planning process.  A Health & Longevity Risk Assessment is effectively the foundation on which all prudent financial planning is built, to ensure recommendations across all strategies are aligned with the client’s real-world risk exposure.

While insurance carriers require underwriting because they must quantify risk, advisors, attorneys, financial planners, etc., should make the same information a pseudo-prerequisite to understand risk and assess:​

• Appropriate planning strategies.

• Avoid recommending solutions that cannot or should not be implemented.

• Expectations alignment before any planning begins.

• That foreseeable risks were evaluated and documented.

• Fiduciary process integrity and compliance guardrails.

A Professional, Structured Approach

To facilitate this step, we recommend incorporating a standardized Medical & Health History Questionnaire into your discovery process, as this allows the conversation to remain:

• Objective rather than personal

• Process-driven rather than reactive

• Documented rather than assumed

When appropriate, the completed questionnaire can be reviewed with INERTIA to help:

• Evaluate potential underwriting pathways

• Identify suitable carriers or structures

• Anticipate challenges before submission

• Support you in developing an implementable strategy

Reframing the conversation is not about “qualifying for a product,' but about ensuring that all recommendations are built on a complete understanding of the client’s risk profile.  Modeling market volatility, interest rate swings, longevity, or tax rates is a mandate, and health-driven financial disruption must be viewed similarly.

INERTIA supports advisors by helping translate health-related information into planning implications, ensuring that recommendations are both implementable and aligned with regulatory expectations.  This step should not be viewed as an obstacle, but more as a "next step" to deliver advice that is informed, defensible, in the client’s best interest, and maintains the professional standards you're acting on.