When hikers come across annoying pebbles, a giant log, or disgusting muck, they have to decide whether to find away over, or through, the obstacle, or brave the ticks and poison ivy and blaze a new trail.
Long-term care insurance (LTCI) specialists are a facing similar sorts of questions these days as they face the effects of low interest rates, tough new accounting rules and hard-won experience on the carriers that write LTCI products.
Some LTCI agents, brokers and consultants have toughed it out, worked harder and gotten great results.
In some cases, they may have benefited from bursts of sales generated by carrier pricing or underwriting changes that might be unpleasant for consumers in the long run but great for motivating wishy washy consumers to buy now in the short run.
Some of the diehards have been picking off great customers from producers who have succumbed to the gloom and the doom and fled from the business.
Other producers have gotten good results from putting more emphasis on selling disability insurance, critical illness insurance, Medicare supplement insurance, case management services, or caregiver support services.
Jesse Slome, for example, is still executive director of the American Association for Long-Term Care Insurance -- and he's also executive director of the American Association for Critical Illness Insurance and the American Association for Medicare Supplement Insurance.
Marion Somers -- aka Dr. Marion, aka The Lady with the Long-Term Care Planning Bus -- talks about elder care and caregiver training on her website as well as LTC financial planning issues. Even in the LTC financial planning section, she lists three financial pillars" -- LTC insurance, life and annuity products, and reverse mortgages.
John Wane, president of American Independent Marketing (AIM), a major LTCI distributor, continues to love distributing LTCI. The AIM website boasts "24-hour a day on-line access to all the LTCi marketing tools you need."
But AIM makes sure to offer linked benefit, Medicare supplement and annuity products along with stand-alone LTCI products, and the brokerage now is devoting major efforts to critical illness market consumer education programs and materials, to help retail producers expand sales of the product.
Traditionally, wholesale brokers have relaxed and let insurers build product awareness.
Wane has been trying to help critical illness break out of niche product tier by creating his own guide to the product for the 2013 Kiplinger's Retirement Guide and getting himself booked as a critical illness insurance expert on morning TV news shows.
Management consultants have noted that deciding when to diversify and when to work harder to maintain focus on a specific area can be complicated.
Companies that focus on the wrong area may fall behind and fade away.
Companies that try to blaze new trails may blaze the wrong trial and fade away on that, or lose their focus and fail because they do a poor job in several different attractive markets.
Joseph Meador and two colleagues looked at the conflict between product focus and diversification in the U.S. life industry in a paper published by the Wharton Financial Institutions Center.
The researchers found evidence that for carriers, at least, diversification across multiple insurance and investment product lines produced better results than a more focused strategy.
"Managers of multiproduct firms are able to achieve greater cost efficiencies than their counterparts in more focused firms by sharing inputs and efficiently allocating resources across product lines in response to changing industry conditions," the researchers concluded.
More recently, consultants at the Boston Consulting Group looked at 1,100 companies. The consultants found that the diversified companies in the sample performed about as well as the more focused companies and were more resilient in hard times.
LTCI specialists who are considering diversifying could start by considering the following questions:
- What are they really good at, and what are they bad at?
- What do they enjoy and dislike about selling stand-alone LTCI products?
- What other products interest them?
- What kinds of licenses and other credentials would they need to get to sell other appealing products, and how easy or difficult would getting those credentials be?
- How viable are the markets for the other products? Are the insurance company units writing those products really hit just as hard by low interest rates and new accounting rules as the units writing stand-alone LTCI policies?
- What holes do they see in the financial, risk management and life management plans of their best and favorite customers?
Many LTCI producers first got interested in LTCI when they started helping their own loved ones with LTC management issues.
For some of those producers, finding other strategies for protecting consumers against easily prevented financial catastrophes could help compensate for the financial, intellectual and ego-related costs involved with trying to blaze a new trail.
AIM, for example, notes in a critical illness insurance guide that it developed that, "When you or a loved one is diagnosed with a serious illness the last thing one should have to dwell on is how to cope financially. The cash payout from a critical illness insurance plan provides valuable financial support when it’s needed most."
For producers, the chance to find new, potentially profitable ways to help consumers might be the equivalent of a chance a trail blazer has to find fresh wild raspberries over to the right, past the shrubs past the scraggly weeds.