Long term care insurance is receiving unprecedented exposure on the legislative front as well as renewed interest among consumers. Industry competition has become much fiercer as a result of the Medicaid Deficit Reduction Act, and there is now a scramble to offer LTCI, which can help protect clients from the astronomic expenses associated with long term care.
However, the LTCI industry is on the verge of a potential crisis. Increasingly, LTCI is being marketed and sold based solely on price. As a result, there is a distinct threat that consumers might soon begin to view LTCI as a commodity product, which is a problem for agents, consumers, and the industry as a whole. In fact, if LTCI heads down the same path as term life insurance, it won't be long before LTCI products are sold in the same impersonal manner as term is: directly to the consumer through media such as the Internet. This shift is not in anyone's best interest, as it is important for agents to be able to work with clients one-on-one to determine a long term care solution that best fits their needs.
So what can you do to help differentiate your LTCI products? Stop focusing solely on price and start taking a renewed interest in some of the other critical factors that can help separate one portfolio from another. True, price is a critical factor that should not be ignored, and it often plays a significant role in the decision-making process. However, there are three ways you can set your offerings apart from the competition's: claims, ease of doing business with the company, and product flexibility and value.
Claims
How open is the claims process with your company? A solid and reputable carrier should be willing to share information on the claims process as well as having solid marketing materials that explain the claims process in plain language to the consumer. In addition, unfettered access to a customer service representative about how to file a claim and for general information on the process should be readily available for both the agent and the consumer.
Ease of doing business
Have you had problems working with any companies as an independent producer (or dealing with your own company if you are a captive agent)? It is safe to say that if you are having issues with a company, your client is going to have the same experience. Maybe one carrier is cheaper, but if it's difficult to get information from them and work with them, that's a red flag that should never be ignored. Agents and consumers alike should have no problems receiving prompt answers to questions about products, under-writing, and the claims process. In addition, as an agent, you are entitled to receive outstanding marketing support from your companies on an ongoing basis to help make the sale to your clients.
Product flexibility and value
Of all the products in the market, approximately 75 percent of what is offered within each individual policy is similar to all of the others. The other 25 percent, value-added features, sets each policy apart from the competition. Some of these value-adds do drive up premiums. However, they can help the consumer in the long run.
Another factor to consider is which policy components or riders address your client's future financial needs. Something that might seem irrelevant now might benefit your client by the time they need to use the policy benefits. No one can predict the future, but paying attention to some of the potential value-adds of a policy can be a great service for your client.
Finally, when looking at a policy, consider flexibility and the ability to enhance coverage. The chance to purchase additional insurance without additional underwriting is appealing to many consumers. Also, given inflation, what can be afforded today might change in five, 10, or 20 years. The option to make changes to a policy is a great selling point.
The sensitivity involved with long term care is best addressed with the personal touch that only you can offer. The industry cannot afford to let LTCI become an impersonal product that is undifferentiated no matter who the carrier is. Getting beyond the price obsession is the first step you can take when working with your clients to develop future plans for their future long term care needs.
Brian Peterson is senior vice president and national sales manager for Long Term Care, Allianz Life Insurance Company of North America. For more information, contact Mr. Peterson at brian_peterson@allianzlife.com.
