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Call today: 720.344.0312 Recent LTC Articles How to Turn Annuity Sales into LTCI Sales – and Vice Versa Publication: HIU (Health Insurance Underwriters) Magazine February, 2004 By Wilma G. Anderson I believe that annuities and long-term-care insurance are a winning combination. Sell a client either one, and you’re in a great position to sell the other and help that client enjoy an even more secure retirement. But why should you consider running parallel marketing campaigns for annuities and LTC as a combination? The first answer is that some people will respond to a direct-mail piece on annuities, but will immediately toss out an LTCI mailer. Others will do just the opposite. So, if you want to reach the most people in your geographic area interested in what you have to offer, it’s optimal to market both products. Sometimes you lead with LTC and follow later with an annuity. Sometimes it’s the other way around. Advantages of the Annuity Sale Annuities are usually an easier sale than LTC. There’s little emotional cargo attached to an annuity. The advisor simply has to demonstrate that the annuity is an appropriate investment that makes more sense for a particular investor than CDs, mutual funds or other investments. Another big advantage is that there isn’t any underwriting and there aren’t any health questions to ask the client. Almost anyone who wants to buy an annuity can get one, and insurers issue annuities quickly, giving you cash flow while you wait for your LTC, DI and life cases to be underwritten. Because annuities are a more straightforward sale than LTCI, you can market them more like a commodity. I recommend mailing oversize postcards (5” by 8”) at regular intervals to people aged 55 to 80 in your target area. It’s an inexpensive and cost-effective form of direct mail. Interested recipients can call the local or toll-free number on the back for more information. Then, after the individual has received the educational pamphlet on annuities, you should make a follow-up call to confirm receipt and answer their questions about annuities. If you get this far, the odds are very high you’ll get an appointment and make a sale. Perhaps the only disadvantage of the annuity sale is that the average commission might be smaller than that of an LTC policy. While you will occasionally hit pay dirt with a very large annuity sale, even if the initial sale is modest, you’ve made new clients and won their trust. That puts you in a great position to bring up the subject of long-term care insurance. Advantages and Challenges of the LTC Sale Since long-term care is a much more personal, sensitive and emotional topic than investing, you’ll need to take a different approach. Instead of a postcard, you’ll want to send out a classy mailer – one that exudes professionalism and caring. With LTCI, you’re not selling a commodity. The mailer should include a tear-off response card that asks for the recipient’s birth date and phone number and offers a free comparative analysis. Follow up, make appointments and visit prospects in their homes. The LTC sale is more challenging. If your goal is a quick close, you’ll need to follow a proven path to one-call closing. First, prospects see LTCI as an expense; one they’d rather avoid unless they’re 100% convinced it’s necessary. You must create the need and break down the commonly held denial influences such as “It won’t happen to me.” Then there’s the health interview. You, the agent, must ask very personal questions about your prospect’s health. It must be done in a tactful, sensitive way. Even when you do make the sale, there’s still no guarantee that your clients will pass underwriting. On the other hand, LTC products offer enormous advantages too. First, it’s a wide-open field. Only six percent or so of older Americans currently own an LTCI policy. While it is clearly a needed protection for many adults, it is also one of the most lucrative insurance products, paying handsome commissions and renewals that you can continue to collect for many years. The inherent difficulty of an LTC sale is its positive flip side. That is, if you have walked your clients through the complexities of the product and overcome their objections, chances are high that you have earned their trust and other product sales should be relatively easy. Making the LTC Sale After the Annuity Sale In this scenario, you’ve successfully sold your new clients an annuity. Even if that first meeting went very well, don’t try to sell them an LTC policy right away. It’s too much too soon, and they may feel like you’re pressuring them after they’ve already made an important decision. Instead, when the annuity is issued, deliver the policy to your new clients in person. You’ve already done a fact-finder (you did, didn’t you?) when you sold the annuity, so you should have a good idea about the clients’ assets and investments. You can open up the conversation by inquiring about long-term-care protection. Ask if they currently have any LTC insurance and whether they’ve thought about how they’ll finance the costs of long-term care they are likely to face in the future. If they have the time, you can start your presentation immediately. If not, make an appointment to come back, but no later than a week from that delivery appointment date. Go through the same steps you would when you sell LTC to a new prospect, including conducting the health interview and asking what they plan to do when the status of their health changes. This is where you find out if they can qualify for LTC and when you create the need for a policy. Next educate them about what Medicare does and does not cover. Uncover and deal with their objections. Finally, close the sale by showing them a range of plans that meet their protection needs and budget. I suggest that you compare rates from top-ranked LTC insurers to demonstrate that you’ve done your research and have secured the best deal for them. Making the Annuity Sale After the LTC Sale In this situation, you’ve made the LTC sale first. Since the LTC sale is the more challenging one, additional product sales should be comparatively easy. Again, open up the discussion when you deliver the new LTC policy. When you did the fact-finder for the LTC sale, you took a broad picture of your clients’ financial resources. Now it’s time to get more details about their investments. Ask your new clients if they feel their money is working as hard as it could for them. Most people realize that it isn’t – or they’re not sure whether it is or not. Then you can ask about their existing investments; virtually all older people have CDs or annuities that could be replaced with a superior fixed or variable annuity. You can show your clients fixed-annuity rates, for example, and demonstrate how they outperform CDs on an after-tax basis. Once they understand this, they’ll buy. Often you’ll find that your client wants to buy an annuity, but his or her CD won’t mature for several months or more. That is not a problem. Simply have the client sign the paperwork to buy the annuity, then set up your computer, PDA or other tool to remind yourself a month before the maturity date. When that time comes, you can contact the insurance company, which will arrange for the transfer of funds from the bank when the CD matures. Is it better to start with the annuity or the LTC sale? I don’t think it really matters. Start with the product in which your prospect has expressed a more immediate interest. But remember: The first sale isn’t the end – it’s just a start. Once you’ve established a new relationship, the possibilities are endless. From increasing your prospecting effectiveness to lining up subsequent sales of logical products, annuities and long-term care insurance can be a winning combination. If you’re not including both in your product portfolio, you’re probably leaving money on the table and your clients under-served. Click here to return to list

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