2011 LTCi Market Study: The Big Picture

How to overcome your client cost objections

Long-term care insurance is one of the most practical purchases you can make, and it grows more relevant every day. As Baby Boomers approach and enter into retirement, many with diminished savings after our recent economic depression, investing in their future health care has become one of the wisest ways to protect both their assets and their family. And yet, according to ASJ’s 2011 LTCI Market Study, the No. 1 challenge LTCI agents face is that clients think they can’t afford coverage, identified by an overwhelming 67 percent of study participants.

If agents can’t find a way to overcome this challenge, we could be facing a crisis situation in just a few years. 

“Solve the problem.”

Do you remember this line from Disclosure, the box office hit starring Michael Douglas as a software whiz and Demi Moore as his sultry, stunningly forward boss? While the link between the movie and our industry might not be readily apparent, the relevance of the question should be. We work in a problem-solving business and this mentality must guide all of our client interactions.

One of the biggest roadblocks to selling a long-term care insurance policy is perception. Fortunately, as an agent, this is something you can help direct.

First, think about how you pitch LTCI to clients. Do you lead with cost, with coverage information, with a real-life story?

Let’s get more specific. Have you ever presented a long-term care policy like this:

“Bill and Mary, what I have put together for you is a proposal for a long-term care insurance policy. As you can see, I am recommending a policy for $150 of benefits per day. The premium for the two of you is $4,000.”

What did Bill and Mary just hear? They heard that the premium was $4,000 and that the policy benefit was only $150 per day. This probably does not make sense to them. While they may intellectually understand what $150 of coverage per day means, they will probably still experience a mental disconnect when they hear about $4,000 of cost and $150 of coverage. They may even tune out the rest of your presentation while they process this disconnect. In the end, you are likely to hear objections like: “Why don’t we get back to you on this” or perhaps, “We like what you are saying, but that premium seems a little too steep.”


Communicating value

In cases like this, some simple reconfiguring is essential. As agents, sometimes we get so wrapped up in our presentation that we forget to concentrate on solving the problem. In the case study above, the problem is that Bill and Mary cannot process the true value of the policy benefits in conjunction with the premium. 

Fortunately, there is a simple and effective solution to this problem. First we need to convert the daily benefit number to a yearly benefit: $150 per day x 365 days = $54,750 per year. Next, we need to recognize that these benefits are not likely to be used today. They are far more likely to be used when the client is between the ages of 80–85. Assuming the clients are in their early 60s and inflation will be at 5 percent, the yearly benefit when needed will be three times the current annual amount, or approximately $165,000 per year.

Further, we should assume care services (home health care leading to some type of facility care) will be utilized for 4–5 years. This means that the policy could provide benefits of approximately $650,000–$850,000.

With these new numbers available, we can solve the problem by rephrasing our opening statement:
“Bill and Mary, what I have put together for you is a proposal for a long-term care insurance policy. This policy is designed to provide $650,000 to $850,000 of benefits for each of you, when you are most likely to need it, and the premium for the two of you is only $4,000.”

Now Bill and Mary can see the true value of the policy. They also can see what their risk is if they do nothing at all. 

In Disclosure, Michael Douglas was so distracted by Demi Moore that, for a while, he failed to solve the problem. Once he concentrated on the solution, however, he was able to save the day. I encourage you to give this type of solution-driven thinking a try. You — and your clients — will be glad you did.  «

Scott D. Boyd is vice president of LTC for The National Benefit Corp. 

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