More than two decades ago, we saw the first long term care insurance policies come out. Since then, attractive benefits and features have been added on a continuing basis. Today, LTCI prospects constitute one of the largest target markets ever available to agents.
Yet, despite the size of this huge and ever-growing LTC insurance market, composed of more than 111 million seniors and boomers and millions more young working adults, its potential has barely been touched. Today, there are just about 8 million LTC policyholders, according to the American Association for Long-Term Care Insurance.
Some may find this hard to understand given that almost everyone may someday need the coverage to avoid facing the emotional and economic havoc that could occur if they lack adequate LTC insurance.
If you ask seasoned LTC agents, they will tell you the problem can be traced to a number of disturbing factors, which are well-known to them and which should also be known to those who are considering adding the product to their portfolios.
Spreading the word
First, the industry must do a much better job of spreading the word about the need for LTC coverage. Millions of prospects know little about their LTC risk or the available products because they have never been contacted. Part of the reason is there aren’t enough agents selling LTC insurance. Those who are can only see a few prospects in any given day. If the LTC industry hopes to meet its obligation to those who may someday require the coverage, many more LTC agents will be needed.
Here are some important facts that agents promoting and selling LTC coverage need to tell their prospects:
• Most people believe they’re covered for long term care through either their individual or group health insurance policies or by Medicare and Medicare supplements. They’re not.
• Medicaid, which does cover some LTC expenses, is available only to those with little if any savings and assets. The government has recently made it even harder to qualify; therefore, most people should consider purchasing LTC coverage.
• Medicare and Medicaid are in serious financial condition. Some industry and financial observers, and even the Medicare trustees, have predicted their problems will be very hard to fix. People should no longer consider these government programs to be the solid entitlements they once were, especially for the long term. While this news has been prominently publicized, it shouldn’t be taken for granted that everyone knows about it.
• Most people are in denial. They dismiss the possibility of someday needing long term care. They should be told that long term care has no age restrictions and that no one is immune to a disabling illness or catastrophic accident, which could strike at any time and sideline them for months or even years.
• The average cost of an annual stay in a private room of a nursing home now exceeds $74,000, according to Genworth Financial’s 2007 Cost of Care Survey. And, by 2030, nursing home costs will average almost $200,000 a year, according to the American Council of Life Insurance (ACLI).
• The cost for care at home is often higher, especially in metropolitan areas. And the cost of care in assisted living facilities and adult day care centers continues to grow, with no relief in sight.
• Bottom line, when it comes to long term care, the government has spoken by passing the Health Insurance Portability and Accountability Act of 1996 (HIPAA). By giving tax breaks to encourage the purchase of individual LTC insurance, it has indicated it is up to each of us to take care of our own LTC needs. People need to know that. Most don’t.
Every LTC presentation should include these basic and important facts and, when possible, be enhanced by any new information that becomes available from a number of LTC insurance sources, such as LTC marketing organizations, carriers, the National Association of Health Underwriters (NAHU), the Health Insurance Association of America (HIAA), and the American Association for Long-Term Care Insurance (AALTCI).
In addition, much information about LTC books, videos, and seminars can be found in ads that often appear in insurance and financial services publications as well as in the consumer and trade press, which continues to feature articles on the coverage.
Selling and marketing the policies
As always, individual presentations are an important part of the LTC sales process. It’s vital to have the spouse (if there is one) or another adult family member sit in on the presentation. This is because most financial decisions are rarely made by just one person.
Recently, the government implemented the Deficit Reduction Act of 2006 (DRA), which has closed some major loopholes and made it more difficult for those who would consider transferring their assets in order to qualify for Medicaid. Since this avenue is no longer open to them, some elder law attorneys are suggesting their clients consider LTC insurance. So, LTC agents should be paying special attention to people who are showing an increased interest in the LTC product either by contacting the agency or existing agent for more information. And agents will surely want to contact individuals who in the past have indicated they would consider the asset transfer possibility in lieu of buying LTC insurance since many of them may now be more receptive to purchasing the coverage.
LTC insurance can be marketed in many other ways. They include promoting the product and any related seminars planned on the agency Web site; advertising the product and seminars in local daily and weekly newspapers and electronic media (including local cable TV); and announcing the LTC insurance offering and any related seminars by writing and sending news releases to newspapers and local radio and TV outlets.
But can I do it?
If you don’t feel you can add LTC to your portfolio because of staff or time constraints, think again. Consider adding an LTC specialist to your staff. Or, if that isn’t possible, try to work out a shared commission arrangement with a nearby agency or financial services organization with a good track record in marketing and selling LTC coverage.
Either way, you will directly or indirectly help a lot of people cover their possible long term care needs and enjoy a newfound flow of commission and renewal income. Your existing clients will not have to buy LTC insurance from a competitor. And you’ll never be put in the untenable position of having a client who suddenly needs long term care ask you why you never mentioned LTC insurance to them.
John Wane is president of American Independent Marketing, Yakima, WA and can be reached at 800-672-7202 or info@aimforltc.com. Lenny Anderson is president of GoldenCare USA Inc., Plymouth, MN and can be reached at 800-842-7799 or lga@goldencareusa.com.