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Call today: 720.344.0312 Recent LTC Articles Long-Term Care Insurance a Goldmine for Agents Publication: The Standard New England’s Insurance Weekly March 12, 2004 By Wilma G. Anderson Long-term care insurance (LTC) is the hottest insurance product today, with sales increasing more than 20% a year. The American population is aging, and more seniors realize a lengthy stay in a nursing home can bankrupt them. LTC is lucrative. First-year commissions range from about 60% to 73%, and renewal commissions are about 10% to 12%. Annual premiums vary substantially according to the client’s age and amount of coverage, but $2,200 is about average. On average, a policy will stay on your books for 12 or more years. An LTC book of business is like an annuity that will pay big dividends for many years. If you can reach qualified seniors and give them the right messages, you’ll encounter relatively little sales resistance. The market is wide open because even today only 7% of retirees have purchased LTC insurance. Property-casualty agents like you are in a superb position to cash in on the LTC boom. Your great advantage is that you already have many qualified prospects – the people who’ve bought their auto, homeowners or business insurance from you year after year. Some of them are loyal clients age 60 and older who have accumulated substantial assets they want to protect. They’ll be much more receptive to a solicitation from their trusted agent than from a stranger. If you and/or other people in your agency are already licensed for life and health insurance, there’s nothing to prevent you from getting started now. Several trends suggest that successful independent agencies can no longer be 100% dependent on property-casualty sales. Carriers are reducing commissions, and agents face increasing competition from banks and insurers that sell directly to consumers through the Internet and direct mail. With long-term care, consumers can’t go direct. The insurance carriers need agents to do the field underwriting and explain the product. By selling LTC, you’ll open up more of your clients’ financial portfolio and have the chance to meet your clients’ financial needs completely. Big players in the industry recognize this is important. For instance, State Farm has its own bank now and advertises CDs to its older clients, all in an effort to secure more assets and business for its agents. The more products and services you provide, the stronger your relationship with your clients will be. A customer who buys multiple products from you will be a lot less likely to leave just to save $25 on an auto policy. Selling in Volume I sell more than 400 LTC policies a year, and I’ve found the keys to success are effective direct mail and sales techniques that let you close a sale in one visit to the client’s home almost every time. The average household income for people who purchase long-term care insurance is about $35,000 a year, according to the Health Insurance Association of America. The best sales prospects are people 65 to 74 with $100,000 to $600,000 of liquid assets. If you want to start out with your current clients – a great place to start – you’ll need to identify those who are 60 or older. You may also wish to buy a mailing list of senior citizens in your area. With a professionally designed, market-tested direct-mail piece, you can expect to get a 1%-4% response rate from senior citizens in general. You’ll probably get an even higher rate from your own older customers. The next step is to call the people who have returned postcards and set up an appointment at home. Though not absolutely necessary, it’s best to go to prospects’ homes. People have all their financial and medical records handy at home, and you’re giving a higher level of service. Since you’re dealing with retirees, you can make all your appointments in the daytime. Some experts say that you need make two or more visits to close a LTC sale. Nonsense! With the right techniques, you can consistently close in one call. You’ll need to warm up the clients, establish the need, ask key health questions, compare policy benefits and overcome objections. Creating the need is simply a matter of educating clients about their choices for care and the financial risks they face without long-term care insurance. High-pressure sales and scare tactics have no place in this. When you show clients the right product for their health, their budget and their overall financial plan, they will want to buy from you. And once you’ve made the LTC sale, you’ve opened the doors to sell annuities, mutual funds and more property-casualty insurance. Long-term care insurance can truly be a goldmine for independent agents who take the initiative and start “mining” today. Any agent who’s willing to take a little time to learn about the product and how to sell it will succeed. Click here to return to list

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