Long term care insurance (LTCI) can be valuable in helping protect suitable clients, both financially and emotionally, when they need care. It can also be a great way to establish a strong book of business and livelihood.
I recently conducted a National Partnership Certification class and became involved in a discussion with a couple of brokers about why they talk to their clients about LTCI. Each had a different background and area of expertise. Neither were LTCI specialists, yet they both came to the same conclusion -- while this coverage was important in helping clients protect their assets, it was also important for the brokers to take personal responsibility for their clients' investments and help protect and grow their own businesses. Below are situations that highlight their experiences and the valuable lessons they've learned.
Situation 1: John
Although John began his career as a captive LTCI agent, he now focuses his practice on assets under management (AUM). Over the years, John has established 120 client relationships, many of which began with the sale of LTCI, and has accumulated roughly $36 million in AUM -- a nice-sized practice.
Over the past seven years, 12 of John's clients needed help with activities of daily living and have filed claims on their LTCI policies. Six of them are still accessing their policy benefits today. Had John not sold LTCI to his clients, those same clients would have collectively spent more than $5.8 million of their AUM on long term care services.
Clearly, had John not sold his clients LTCI, the financial impact on them and their families would have been great. It would have also reduced John's AUM by more than 16 percent, affecting his revenue and, worse, he may have potentially lost a client.
Situation 2: Ginny
As an insurance agent, Ginny's primary focus over the years was selling life insurance.
Ginny recently shared a story about a client of hers, Margaret, a widow who had assets totaling more than $3 million. Assuming Margaret would not be interested in LTCI, Ginny never thought to mention it during any of their review meetings. As a result, Ginny never learned about Margaret's personal experiences with long term care.
Earlier this year, Margaret's car insurance premiums became due. As Ginny described, Margaret was somewhat "old-school" and preferred to handle such transactions in person. While she was at her agent's office writing the check for the premium, she noticed a simple sign on his desk that read, "Ask me about long term care insurance." She did, and after her car insurance agent explained the need, she purchased the coverage. Impressed with her agent, Margaret moved her life insurance business from Ginny to him.
Ginny lost one of her best clients, an expensive lesson she won't make again. Ginny now makes sure to discuss LTCI with all of her clients, regardless of their wealth. In the end, she learned that if you don't talk with your clients about LTCI, someone else might.
What works: Three tips for increasing your LTCI sales success
1. Discipline: Get in the habit. Every time you interact with a client who doesn't have LTCI, take the time to discuss it. Often, life events provide an opportunity for the conversation, but you also can use a variety of tools to begin a seamless conversation.
2. Educate: Be a myth buster. We need to dispel two of the most common myths of LTCI coverage -- it's too expensive and too complex. Some policies are no doubt expensive, and some can be complex.
But for the majority of our clients, there are suitable options that are affordable and understandable. Be familiar with the costs of self-insuring and the impact it can have on investments and families. You'll also want to be sure you are up-to-date on the latest, simplest, and most affordable products.
3. Make it affordable: There are many ways to make a policy more affordable. And remember -- having some coverage is always better than having none.
- Consider a policy that has a higher daily or monthly benefit, a shorter benefit period, and an inflation option that adjusts annually with the cost of care. With this design, your clients will get a better balance of coverage at a better price.
- Consider the discounts many carriers offer for being in good health, having a spouse/partner, or having been a loyal customer.
Much is made of the benefits of offering LTCI, but not nearly enough about the liability of not offering this coverage. While you don't need to be a specialist, simply having the offering in your portfolio can help your clients gather options for long term care funding and help your business attract prospects and retain clients.
Craig Hitchcock is the Great Lakes regional director for John Hancock's long term care insurance division. He can be reached at chitchcock@jhancock.com.
