LONG-TERM CARE INSURANCE: NOT FOR SENIORS ONLY!
Imagine an insurance product that your clients will keep for 20 or 30 years, or longer, while continuing to pay you generous commissions. Imagine a product that Thiscan save your clients a lot of money. This document alerts you to the many benefits that Long-Term Care insurance provides your clients, and you.
Long-Term Care Insurance (LTCI) when purchased early — at about 45 to 55 years of age — can generate commissions for decades.
This is not “too good to be true.” There is one catch. Younger buyers are more difficult to close because they don't feel a pressing need to buy LTCI. Although these sales take more time and persistence, the potential rewards are greater. And the sale, although more challenging, is far from impossible. More baby boomers are buying LTCI today instead of waiting until retirement.
CREATING THE NEED
Surprisingly, 40% of Americans receiving long-term care are working adults 18 to 64 years old, according to the consulting firm Conning & Co. Although anyone can become disabled at any time, buying LTCI is especially important for people in their 40s and 50s. Chronic degenerative diseases such as Parkinson's and multiple sclerosis, which are uncommon in younger people, begin to strike more frequently in this age range.
Long-term care is expensive at any age, but particularly devastating for the middle-aged. A person disabled at 50 might need care for 30 years or more — which can bankrupt even affluent families.
Not many middle-aged people think about becoming ill and needing long-term care. They're more concerned about putting their kids through college and saving for retirement ? both expensive propositions. And, unlike older people, they've not yet seen their health begin to alter.
It's up to the agent to spell out the facts and create the need. As an agent, you need to focus on the “what ifs” for this group. “What if you're permanently injured after a car crash and need care? How would you pay for it?” Today, a private room in a nursing home costs about $137 a day, or $50,000 a year, according to a MetLife survey. This is only an average ? in some cities the price can double.
Ask your middle-aged prospects about the health of their parents. The long-term care issue becomes more real after experiencing or thinking about providing long-term care for a parent or relative.
Point out that the best time to buy insurance is when you're healthy and can qualify for the best rates. LTCI is much less expensive at younger issue ages. The client locks in the low rate for that issue age forever. If your customer keeps the policy long enough, they might actually pay less total premium by buying it sooner than later — while enjoying more years of protection.
COMPLETING A FINANCIAL PLAN WITH LTCI
Ensuring that your clients have adequate LTCI gives them total flexibility in their financial planning because they no longer have to save for long-term care. Instead, the remaining money can be dedicated to retirement and their children's education — and you can help them invest to reach these goals.
If you're starting with a disability sale, LTCI is a perfect add-on. For working people, DI and LTCI address two sides of the same problem. One replaces salary, while the other covers the cost of care. Neither one alone accomplishes the whole job.
In my LTC sales coaching sessions and seminars, I stress closing the sale in one call when selling to retirees because they can see LTCI as a real, immediate need. With middle-aged prospects, you rarely close in one visit and probably shouldn't try. With pre-retirees, you must first put the issue of long-term care on their radar screen and build a sense of urgency. Concentrate on doing this during your first call.
If you've made real progress in creating the need in your first call, concentrate on closing the sale in your second call. This involves comparing policies and rates and overcoming objections. Just as retirees often believe that Medicare will cover their long-term care, working people often mistakenly think that their Health insurance policy will pick up the bill. Disabusing them of this notion is often your first job.
If you've structured the sale properly by answering questions, uncovering objections as you go along, and eliminating roadblocks, closing will be easy — whether your prospect is 50 or 70.
DESIGNING THE PLAN
Younger buyers should have two key features in their LTCI plans : a low deductible and compound inflation protection .
Without automatic inflation protection, the policy probably won't provide enough money when it's needed most. Who knows what a nursing home or home care will cost 30 years from now? It definitely won't be less expensive. A policy that doesn't keep up with inflation might end up being a drop in a big bucket.
A 90-day elimination period isn't a good idea for the same reason. Today, with a 90-day deductible, the client might pay $15,000 out of pocket for care in a nursing home. Add many years of inflation to this and you've created a huge spread. Years from now, you probably won't be able to buy a deductible as low as $15,000.
Besides protecting the client, inflation protection and a low deductible protect the agent. People often forget about the money they saved in the past. They know they face a big bill now and often blame the agent for their problem.
If the client won't go for a zero-to-30-day deductible, recommend purchasing an annuity as a way to self-insure at least part of the risk.
TURN ONE SALE INTO MANY
One of the biggest advantages of selling LTCI to working people is the greater potential for multiple sales. Ask your new customers for referrals, possibly both sets of parents. Or, volunteer to present options to the entire family about long-term care and how to fund it. Now, instead of selling two policies, you're in a great position to sell six!
Unlike retirees, most middle-aged people have jobs, making worksite marketing a powerful way to reach them while allowing your sales to take off. However, worksite sales take more time because you must make two sales. First, you need to convince the employer to offer a LTCI plan. Then, you need to sell the plan to individual employees.
It can take as long as a year to convince the employer to add LTCI as part of the company's benefits package. Many employers, at first, say they're not interested. Keep the dialogue going. If you ask questions, you might find that one of the owners has had a parent or family member in a nursing home or assisted living. Upon discussion, they might relate their own experiences to that of their employees.
Another powerful worksite selling point is that adding LTCI to the benefits package need not cost the employer anything. At most companies, LTCI is a voluntary benefit paid entirely by the employees. The only cost to the employer is the minimal administrative expense of adding a plan to their package.
By adding LTCI as a voluntary benefit, employers provide a powerful, implicit endorsement of the agent and insurer. Middle-aged employees who wouldn't have thought about LTCI before, might now consider it. Some are already purchasing optional products such as Dental and Vision Care insurance through a payroll deduction plan, so they're familiar with the concept.
Additionally, group plans often offer lower rates than individual policies. Insurers might also offer open-enrollment periods during which they waive underwriting requirements. Employees should be continually reminded of these advantages through payroll stuffers, brochures, e-mail, and enrollment meetings. Insurers often provide off-the-shelf educational materials, as well as enrollment professionals.
TRAINING IS KEY
LTCI sales training is as crucial in the pre-retiree market as it is in the senior market. Whether you're new to the product or have been selling it for years and want to boost your success, it makes sense to take advantage of the wisdom of experts. You've probably had first-rate training on selling Disability, Health, and Life insurance, but perhaps little or no LTCI sales training.
If so, there's no need to reinvent the wheel and struggle with hit-or-miss techniques. Good training can boost your success, no matter what level you've attained, by pointing you toward fertile fields and helping you sharpen your face-to-face selling skills while avoiding dead ends. Available training options include group tele-coaching, seminars, and audiovisual materials. A relatively small investment in training pays big dividends.
America's need for long-term care will increase as health care costs continue to rise. The oldest of America's 76 million baby boomers turned 55 in 20033. The youngest are celebrating their 38 th birthdays. Selling LTCI to people in their 40s and 50s represents a huge opportunity for agents to “do well while doing good.”