2011 LTCi Market Study: Funding Our Future
2011 LTCI Market Study reveals expectations of increased sales and a greater reliance on education
“Sales will be up significantly for 2011 and agents have every reason to be confident that the trend will continue,” said Jesse Slome, executive director of the American Association for Long-Term Care Insurance. He added that the just-concluded open enrollment for the federal Long-Term Care Insurance program likely garnered consumer interest, just as it did during the last open enrollment several years ago, when “sales of traditional LTC insurance protection spiked because consumers found they could often get better coverage for less money in the private marketplace.”
Of the potential increase in 2011 sales, Ellen Davis, president of Life Health Home Insurance Group, said, “I’ve actually seen it already.” As the tail end of the Baby Boomers reach their late 40s, she believes they are beginning to weigh the cost of long-term care issues, which will contribute to increased sales in 2011. “Even if a 45-year-old today paid their premium for 40 years — the same premium for 40 years — they’d be spending a fair amount of money over that 40-year period, [but] they would break even with a stay of less than a year in a facility at today’s dollars.”
“I think the Baby Boomer bubble and the media are finally aligning,” said Jonas Roeser, vice president of operations and chief marketing officer at LTC Financial Partners and president of the LTCI-focused 3in4 Need More Association. “I also believe there have been enough people that are having or had a long-term care experience with their parents or grandparents. These experiences spur conversations, which creates more awareness among peer groups.”
Personal experience has certainly prompted more people to ask Teresa Eagan, owner of LTCA, Inc., about LTCI. She had such a good 2010 that she wasn’t sure 2011 could be better. As a broker who works with agents all over Indiana, she’s happy to report that, so far, things are looking good. “It seems like the last three or four months, people are just calling out of the blue,” she said. Not only are clients having personal experiences that push them to consider LTCI, “but they’re also doing a little research on their own. They’re talking to their financial planners, they’re talking to other friends,” Eagan said, adding that she believes people are much better informed about LTCI than they used to be.
The LTCI buyer
Those in their 50s and 60s continue to be the biggest purchasers of LTCI, with agents reporting they buy close to 95 percent of all LTCI policies. Other priorities, such as paying off a mortgage or putting kids through school, often monopolize the thoughts (and dollars) of folks in their 40s. Davis, however, is one of the 2.7 percent of agents who reported their hottest age group for LTCI was clients in their 40s.
What’s the secret of her younger bracket success? She said she starts laying the groundwork early, talking with young couples and families about all their insurance needs. “Talking about long-term care is always part of the conversation anyway, because we’re sitting there, we’re not planning for that moment, we’re planning to put what I call an insurance portfolio together over the next 5, 10, 20, 30 years.” As part of the conversation, she uses the many personal stories she’s gathered over her 26-year career to help clients understand what can happen in life, and why it’s important to have LTCI when the time comes.
Barriers to getting long-term care coverage later in life may also be less of a hindrance to younger clients. “Policies are based on age and health,” Roeser said. “The younger the applicant, the less expensive the policy, and usually, the younger an applicant is, the better their health.” He concedes that getting the attention of younger prospects is often more difficult, but said, “I have found it easier to get in front of the 40-plus crowd in the worksite and through group presentations.”
Today’s market challenges
Finding good leads in any age range is still a top concern. Agents report they’d like to receive more leads from insurers (57.1 percent) and wholesalers or marketing organizations (57 percent), but most are finding their best lead sources to be referrals from other clients (31.3 percent), their existing books of business (30.8 percent) and referrals from centers of influence (17.5 percent).
Leveraging educational opportunities is turning out to be a good source for Robert Hoholick, a field agent with the Knights of Columbus’ insurance division. “I’m doing what I refer to as end-of-life issue seminars.” He partners with others, such as social security employees and attorneys, who can discuss wills and probate issues. He may also bring in an expert to talk about organ donation, and a representative from a local nursing home to discuss the logistics of getting care.
“People come in just to hear about end-of-life issues and the next thing you know, it’s generating leads,” he said. “People think, ‘Hey, if I’m thinking about those things, then long-term care should maybe be higher on the list after having heard what you had to say.’”
Agents report their top three selling challenges are that clients believe they can’t afford LTCI (66.6 percent), clients think they don’t need it (59.5 percent) and clients procrastinate (52.8 percent). Overcoming those obstacles is often a matter of carefully crafting the right plan and educating clients on its benefits.
“Most people are unaware of the affordability of long-term care insurance because they are presented with options that lead them to over-insure,” Roeser said. “The best long-term care plan is the one that gives you peace of mind, not more stress over the cost of the plan.”
Slome encourages agents to zero in on the slice of clients most likely to be interested in LTCI. “If you focus on those who can afford this coverage and have something to protect, it’s very simple to explain how affordable the protection is compared to the financial risk,” he said.
Benefits over cost
The need for more affordable products was reported by 40.6 percent of agents, but policy premiums are third down the list of client concerns at 17.3 percent, ranking behind getting a policy that allows the client to stay in their own home and offers a high degree of flexibility. This focus on benefits over cost leaves the door open for solid selling.
“We’re definitely having a lot more people who get it, who get the need,” Eagan said. Once a client understands that having no plan at all isn’t a good option, she said that asking some pointed questions will usually move the conversation forward. “What is your plan? How do you plan to pay for your long-term care, or how would you rather pay for it?”
One thing that hasn’t garnered the attention of clients is the still-to-be-nailed-down CLASS Act — over 75 percent of agents haven’t even been asked about it. And while we don’t yet know the Act’s costs and details, agents don’t seem to be worried about it slowing their sales.
“I don’t think it’s going to hinder me,” Hoholick said. “I think that, if the person is sold on the idea of going with a quality plan at a fair price … I think we stand up pretty well.”
Across the board, agents agreed that increased consumer education as a result of the CLASS Act would likely benefit private LTCI sales. The non-profit 3in4 Need More Association also believes that education is the key. They estimate that three out of every four Americans will need long-term care services, and that most people are not prepared for the cost of self-insuring. In partnership with elder care expert Dr. Marion Somers, they launched a national bus tour in June designed to raise awareness for long-term care planning.
“The bottom line is education,” Roeser said. “All employees deserve to know their options and to have access to specialists who can help them plan for their future long-term care needs.”
Going forward, the planning process will have to become more technologically savvy. While most agents reported that they aren’t leveraging their own business-focused website, the number of visitors to AALTCI’s site shows that interest in LTC planning issues is growing. “We are seeing double-digit increases in the number of consumers visiting our website for information or to find a local long-term care insurance agent,” Slome said. He added that he doesn’t expect his group’s Internet traffic to slow any time soon. «
Julie Knudson is a freelance business writer based in Seattle.