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Call today: 720.344.0312 Recent LTC Articles How to Penetrate and Serve: The Growing Group LTCI Market HIU September, 2004 By Wilma G. Anderson I believe that long-term-care insurance is poised to become a top voluntary benefit. Employers like LTCI because it can help employees stay productive at work instead of having to take time off to care for their parents and struggle with the additional financial stress. And LTCI is a wide-open field as only a few percent of Americans currently have the coverage. Today, big organizations like large employers, unions and associations are being courted aggressively by large benefits brokers. There’s a lot less competition for smaller organizations with fewer than 100 employees or members – and relatively few of them have voluntary plans. This spells opportunity for health agents. Of course, your own current client base, whether it’s made up of small or large organization or a mixture, is the ideal place to start. Perhaps many of your clients don’t have LTCI as a benefit, perhaps some do, but few employees have signed up. How Group LTCI Works When group LTCI is available to the employee, the employee’s spouse and both sets of parents can also apply – so you can potentially make six sales for each employee. Most group policies are virtually guaranteed issue. There’s no medical exam; applicants just have to answer a few questions confirming that they do not have conditions such as multiple sclerosis, Parkinson’s or dementia. The group premium rates typically have a 10% discount from retail. The benefit is portable, so employees can keep their policies when (or if) they leave the company. The renewal commissions are usually a level 10% for as long as the policyholder pays the premiums – which can be many years, especially if he or she is in her 40s or 50s. Selling group LTCI effectively requires several steps. First, you should represent at least two carriers that write group business. Look for carriers that have a recognizable brand name. It’s best if one of the carriers will take someone who is insulin-dependent, too. You should check for that underwriting feature in any policy you consider. Next, you need to get the business owner of benefits administrator to sign on. Even though LTCI is 100% employee-paid, it still takes an appointment to sell and convince the decision maker(s) to offer a plan to their employees. They won’t want to add a new benefit unless they’re convinced that it will truly benefit the business and employees and won’t add more expense or administrative burden to the human resources staff. Make sure to emphasize that your plan will: Provide meaningful insurance coverage for long-term-care expenses. Make the cost of insurance affordable over the long term. Provide flexible plan design and administration to address the particular needs of all employees or members. You can reach business owner several ways. Start out by writing or calling your current clients to let them know about the new service you’re offering. Press releases and advertisements in newspapers or trade publications can take your message to a mass audience beyond your clients. Public speaking also pays off. Business groups like the Chamber of commerce and Rotary are always looking for speakers. Associations also look for spears, both for their main programs and for special programs for the members’ spouses. To stay under the radar and avoid competition from national brokers, focus on companies or associations with 25 to 200 employees or members. Organizations in the sweet spot are usually big and sophisticated enough to recognize the need for voluntary benefits and have the internal systems to support them. (Smaller organizations may not want to offer voluntary LTCI, but you can sell individual policies to the business owner and key executives. This is especially attractive now because LTCI premiums are, for the first time, 100% deductible as a business expense.) Once the decision-maker at the company says yes, you’ve gotten over the first hurdle. Now you need to sing up the employees or members. Running Effective Enrollment Meetings When you’re ready to meet with company employees to talk about the LTCI plans, here are a few tips that can increase your enrollment figures: Always warm up your group. Most people, at least initially, would rather think about anything else than insurance, especially LTCI. You need to get them to relate to you as a person, relax and get engaged. Now you can make the issue of LTC real and important to them. I start by asking the audience, “How many of you are getting mail about long-term-care insurance?” Get a show of hands. Then you can ask how many people have thought about buying LTCI but haven’t made a decision yet. Ask how many have actually bought a policy. How many have parents who have bought a policy? A crucial question is: “Have you had any experience with long-term-care in your family? Has a relative had care at home and later had to go to a nursing home?” Usually, a few people will raise their hands. Pick out a couple and ask if they’ll share their experiences with the group. When employees talk about what they’ve gone through with their parents or grandparents, it grabs everyone’s attention and creates a bull’s-eye on people’s foreheads. Their stories have a lot more credibility and punch than your exhortations about the need for LTCI. Most people think, “It will never happen to me.” Personal stories show that it can happen. It makes them think – and that’s all you need for an opening. Look at the age of your audience. If it’s a predominantly young group, LTCI will be a more difficult sale and you’ll need to point out that while the odds of needing care at a young age are low, they’re not insignificant. A car or motorcycle crash can turn anyone into an invalid in a second. Point out that LTCI helps protect a breadwinner’s family, especially when there are young children to care for. If it’s a mixed group, you’ll need to make your presentation have as broad an appeal as possible. Try to get employees of various ages to share their stories. Benefits brokers often find LTCI to be a difficult sale because there is so much emotion around it. Vision and dental care don’t evoke these emotions. They’re easier to sell but also usually carry low premiums and commissions. With LTCI, you’re talking about aging and becoming infirm and dependent – subjects most people don’t want to think about. LTCI is both an emotional and a rational sale. Because of this emotionalism, don’t try to make any sales in the middle of a group meeting. Your goal is simply to create enough interest to get attendees to take the next step and see you one-on-one, either by appointment or, preferably, right after the group talk. Making the Face-to-Face Sale Okay, so now you have gotten the employee or member to sit down with you to discuss LTCI. In a group situation, you have an advantage because most people believe that group plans are better buys than individual policies, though this is not always the case. Additionally, the organization’s endorsement carries weight. And, since you’ve given your group presentation and elicited employees’ stories, you’ve already done some of your homework toward making the sale. But there’s still much to do. You must create the need in the employee’s mind. No need, no sale – it’s that simple. As I mentioned above, the first step is breaking down denial. Most people think they’ll die peacefully in their sleep and that the nursing home or home care is for other people. Additionally, many folks are still confused about Medicare and mistakenly think that it routinely covers long-term-care. You’ll also need to expose and address any objections to purchasing a policy that the individual may have. Objections aren’t to be feared of avoided. Probe and get them out in the open so you can address them as early in the interview as possible. Objections only become sales-killers if you let them fester and grow. Again, remember that you’ll be dealing with strong emotions. Show young employees an unlimited plan. The difference in price between and unlimited plan and a three-year plan for a younger buyer is minimal. With age, the difference widens. With older employees, show them three options: three-year, five-year and unlimited plans. That way, you’ll be able to show them a plan that meets their budget and avoids sticker shock. Numbers can be convincing, too. An interest on savings diagram can be persuasive. Point out what care costs today and how quickly costs have risen. By all means, find the money to pay for premiums before you show employees the cost of their LTCI premium. Let’s say a plan provides up to $150,000 in total benefits. The premium is $750 a year. Divide the annual premium into the amount of available benefits that could be paid under an LTCI plan. Ignoring interest and taxes, someone would have to pay that premium for 200 years before they could pay IN more than the insurance company could pay OUT in long-term-care benefits. Engineers and technologists love this kind of explanation. For people in their 40s, 50s and even early 60s, emphasize that LTCI is a crucial piece of their financial planning. Buying the coverage during the time they are accumulating assets for retirement is ideal. With insurance, an employee can concentrate on saving as much as they can for retirement and not have to worry about putting any of it at risk to pay for long-term-care. Since the LTCI sale is different from other insurance sales, training can make a huge difference in your closing rate. You can get good sales training cost-effectively through group telephone coaching sessions, seminars, workshops and print and audiovisual materials. With the baby boom generation approaching retirement, LTCI promises to be one of the fastest-growing, most lucrative financial products of the next decade – and a lot of it will be sold at the workplace. It’s a ground-floor opportunity for savvy agents. Click here to return to list

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