2011 LTCi Market Study: A Product for the People

How to communicate the need for LTCi

The need for long-term care surrounds us every day. With an aging population, it’s fair to say that every single one of us has been affected, either directly or indirectly, by an extended health care situation. It’s a reality that we must discuss and, most important, proactively plan for. 

This burgeoning awareness presents a valuable opportunity for financial professionals: long-term care insurance. Yet even with a growing demand and heightened consciousness, many advisors find it difficult to navigate the LTCI policies and sales cycle. Pair this perceived complexity with industry trends such as rate increases and carriers exiting the marketplace and, much of the time, the conversation about planning for extended health care is never even initiated. 

Herein lies the opportunity. A successful LTCI colleague of mine has compared selling long-term care insurance to being the only umbrella salesperson in the city during a rainstorm. It’s an apt analogy. In recent years, we’ve seen successful long-term care insurance producers experience extremely high closing ratios. Not only that, these producers encounter an infinite number of prospects, despite perceived turmoil in the LTCI marketplace. 

How are they doing this? How are the top producers consistently placing $200,000 of LTCI premium per year with very little effort?  The answer is simple: They show their clients and centers of influence how to purchase long-term care insurance. 

An emotional product

Far too often, advisors talk about long-term care planning in terms of statistics, the cost of nursing homes and products. This is where you need to change your thinking. Remember that every person you meet knows someone who has required extended health care in some form, either at home or in a facility. So, start your LTCI conversation here. Long-term care is an emotional and highly personal topic. Like many financial products, features or riders don’t sell this insurance. It’s sold as a solution to a particular risk. 

The sales cycle for LTCI should not be a product presentation, but a well-planned and thought-provoking conversation, lead by the producer. Our job is to ask as many questions as possible, in order to make this risk real in our clients’ minds. For example, one leading LTCI producer I know asks the same questions at the beginning of every long-term care planning conversation.

  • Tell me about your experiences with long-term care. 
  • Where are your parents living?
  • How did your parents pay for their care?
  • What is your current plan for extended health care?
  • What assets have you earmarked to pay for extended health care?

As this producer points out, questions like these will get your clients talking about their personal experiences, beliefs and values. Armed with this information, you can more easily determine the direction and type of planning you’ll talk about, and thus begin to educate your clients about a need they’ve just verbalized: their future health care.

Analyzing the need

Understanding your clients’ experiences with long-term care is absolutely critical to the sale of long-term care insurance. For example, if your client had a parent that required home health care and you’re speaking about a nursing home, you probably won’t place an LTCI policy. The reason is simple: Your client’s family history has taught her that, like her parent, she won’t need nursing home care in the future.

Instead, the conversation you have with this client should revolve around home health care and community-based care. You might ask questions like:

  • How did your parents pay for their care at home?
  • Did you help in providing that care?
  • Where do your children live?
  • Do you plan on moving closer to your children?

These questions will generate detailed answers from your clients. By asking such questions and — this is key — by listening to their answers, you’ll be able to identify the areas that are important to your clients. If your client communicates how they don’t want to be a burden to their children, your conversation should revolve around protecting the family. If your client talks about how much money their parents spent on care, you may want to stress the importance of asset protection. 

These questions will also help you structure the best LTCI policy options. If your New York City-based clients plan to retire in South Carolina, a much lower daily benefit may be in order. By initiating and leading this type of thoughtful conversation, you will actually see clients request a long-term care insurance application. They will make the decision on their own (albeit with your guidance) that transferring this risk to an insurance company is the prudent thing to do.

Covering the basics

Once you have a firm grasp on your client’s experiences and plans regarding long-term care planning, the conversation about the actual product is very basic. Riders and contract language rarely come up at this point. One thing you must address, however, is cost. Your client may perceive LTCI as an expensive product, so it is important to dispel this myth.

At a first meeting, you might show clients three basic options: good, better and best. For example, depending on the client, you might show a policy that offers coverage for $100/day vs. $150/day vs. $200/day, either with guaranteed purchase option inflation or a fixed inflation option. Standard health class and monthly mode are always shown. These are not necessarily the plans you need to recommend — rather, you can use them as a guide to let your client see just how affordable this protection can be. A good/better/best presentation avoids sticker-shock and serves as a foundation to structure the appropriate policy with the client’s individual goals and budget in mind. 

Looking ahead

Rate increases and carrier churn will likely continue to be the norm in the LTCI industry. However, our clients’ personal experiences and escalating need for long-term care will also continue — which means that any external challenges the industry presents won’t truly be a roadblock to placing long-term care insurance.

Our clients are concerned about this topic, and they’re thirsty for a competent advisor to help them navigate their options. If you ask the right questions, listen to the answers and pitch a product that your clients can understand, you’ll begin placing more long-term care insurance with minimal effort.  «

Brian M. Johnson is the director of business development at New York — National Long-Term Care Brokers Ltd. in Clifton Park, NY

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