Phyllis Shelton has heard every reason in the book for why long-term care insurance has struggled over the years. People are living too long. Lapse rates are too low. Investment earnings are lagging. Premiums are too expensive.
“Even back in 1994, they were complaining then about the premiums,” says Shelton, president of LTC Consultants in Nashville, Tenn.
But she doesn’t entirely buy those excuses. The big reason LTCI isn’t thriving, according to Shelton? Agents aren’t selling it to the right people.
“We have to sell LTCI to the masses to make it affordable,” she says. “We haven’t done that, and I blame our industry for that.”
Selling more worksite LTCI, to younger clients, at a greater rate, Shelton says, would help make LTCI a more affordable product — and protect more lives at the same time.
“The market has shrunk for traditional LTCI, but the need has never been greater for this product,” she says. “This is the No. 1 reason people outlive their savings.”
See also: 5 ways to sell LTCI to boomers
Could Shelton be wrong? Sure. But given her decades of experience shaping LTCI sales methods and training producers on how to use them, it’s probably not wise to bet against her.
The makings of a guru
Shelton didn’t plan on becoming an LTCI expert. In fact, she didn’t plan on a career in LTCI at all.
She started out in the home office at Blue Cross in the ’80s, working as a marketing support manager in charge of developing product presentations.
She didn’t love it.
“I wasn’t happy because I was a middle manager, and I had no control over my life,” she says. “I was working these long hours and felt like I was making no difference.”
After going through challenging long-term care experiences with both her grandpa and her mom, she felt she could have more impact in the long-term care insurance field. So in the fall of 1988, she became an LTCI agent with John Hancock, and “I’m still glad,” she says. “I’ve never looked back.”
But that doesn’t mean it was easy. The LTCI sales process at the time was “primitive,” Shelton says. Her company would send letters to everyone 65 and older in the area. If anyone responded, Shelton was in charge of calling them back and making the sale. “Easy,” her boss called it.
Shelton made just three calls on her first day of using the list. The first person was too old for LTCI. The second wasn’t interested. The third said he’d be happy to purchase her product; he’d been looking all over the place for a good lawn care provider.
Shelton marched into her boss’s office. “I said, ‘Listen, I’m gonna do dishes before I do this,’” she says.
So Shelton was sent out to run seminars at senior centers instead — a selling technique that proved just as fruitless. “They would fall asleep in front of me,” she says. “One woman complimented me on my singing.”
Taking a different approach, Shelton moved her seminars to younger venues, like community centers and churches. “I knew, actuarially, that was what we needed to do for long-term care to make sense,” she says.
She found a calling. Her seminars were so successful at producing sales that she started using the same educational approach with every client she met. Pretty soon, she was filing four to 10 applications a week.
“I started hearing from people at John Hancock, and then I started hearing from people across the country,” she says. “They wanted to know how I was doing it.”
The demand became so great that Shelton decided to put all of her tips and techniques into a marketing system designed for other agents. But when she talked it up to producers and carriers, they weren’t interested. “We just thought it would fly off the shelf,” she says. “And we didn’t sell one copy.”
One day, on a plane back from Portland, Maine, Shelton says she had a vision. Instead of a marketing package, she’d start holding one-day meetings, all around the country, to teach her method to producers.
She tested the concept in four cities that spring; 19 more cities followed in the fall. Soon, Primerica was asking her for workbooks. Bankers Life hired her to train its 3,000 agent sales force.
And a young, pre-fame Suze Orman reached out to her. “She came up to me and said, in so many words, ‘I’m going to be a really big deal,’” Shelton says, laughing. (Orman regularly touts Shelton as an LTCI resource these days, and her enthusiastic endorsement graces the cover of one of Shelton’s books.)
Eventually, Shelton landed major contracts with 10 different carriers, from State Farm to Allstate. “It was a culmination of all that work over the years, the result of this long grassroots effort,” she says.
Today, Shelton’s firm specializes in producer sales training, marketing materials and client education. She offers several different books for agents, with some meant to be distributed to clients for educational purposes and other that aim to educate agents themselves. And she still sells the occasional LTCI policy to clients herself.
“I’m very willing to share everything I’ve learned because I want families to be protected,” she says. “And if someone comes to me and doesn’t already have a knowledgeable agent to work with, you bet I’ll be there on the frontline, getting them coverage.”
How to sell LTCI
Shelton estimates she’s trained about 65,000 agents, either live or online, in her career. Yet, her message still hasn’t gotten through to many.
“We still have financial advisors out there telling people to just save for long-term care,” she says. “We don’t tell people to save for their house burning down. Why would we do that for long-term care?”
After all, nursing home care is projected to cost $30,000 a month in 30 years, Shelton says, and the average client needs about 3½ years of care. “So if you multiply that $30,000 by 40-some months, most people aren’t going to be able to come up with that money,” she says.
Those are the kind of numbers Shelton encourages agents to share with their clients. “I believe that 80 percent of the sale is education and 20 percent is product,” she says. “Consumers need to know what it is, how much it costs, that it’s commonly needed. When you lay the groundwork for all that, then it’s easy to close.”
Of course, there’s still the issue of cost. LTCI can represent a significant expense, even for well-off clients. Shelton admits that less-affluent clients may not be able to get a policy that covers all their needs, but when it comes to something like long-term care, every little bit helps.
“You talk to the person and find out what they need in their policy,” she says. “Project cost of care out 30 years, ask how much they’ll want a plan to cover, and go from there.”
See also: Closing in on better LTCI close rates
Mixing and matching products — like life insurance and annuity products with LTC components — can also increase protection while providing for other needs. “It’s not unlike an individual advisor who says, ‘We’re going to do so much in stocks, so much in mutual funds, so much in annuities,’” she says.
Shelton swears by this type of educational, expectation-setting approach. “I’ve never had a complaint, ever, because I take the time to listen to the client and plan,” she says. “And when people get to claim time, they have the percentage they were promised.”
The road ahead
Shelton is optimistic about the future of LTCI, mainly for two reasons: worksite sales opportunities and the Partnership for Long-Term Care program.
“I’m all about getting it out at the worksite,” Shelton says. “For the employer, this is productivity insurance.”
A lot of workers these days, especially female workers, have to drop out in the prime of their careers to act as caregivers for their parents or spouses, Shelton notes. Providing LTCI coverage options, even if the employer doesn’t help with premiums, can help with that.
Marketing LTCI in the workplace also reaches a much younger audience. “Young people aren’t sitting around at home,” Shelton says. “You have to go to the workplace because that’s where the young people are hanging out.”
See also: 3 ways to pitch worksite LTCI
Purchasing coverage at a younger age is also less costly, especially given LTCI’s rising price tag over the last several years. “What used to be the premium for a 60 year old is now the cost for a 50 year old,” Shelton says.
Jesse Slome, executive director of the American Association for Long-Term Care Insurance, agrees that there’s room to expand LTCI worksite sales. “While the market for multi-life long-term care sales has diminished, there is still an enormous opportunity for future growth,” he says.
When you look at group and individual sales combined, Shelton says, nearly half of LTCI sales have been at the workplace since 2008.
Shelton’s also a vocal advocate for LTC Partnership plans. Working in concert with Medicaid, the private plans provide long-term care coverage and, should the policy benefits run out, allow users to receive help covering the remainder of their long-term care costs through Medicaid, provided certain conditions are met.
Out of the roughly 350,000 people who bought LTC Partnership plans in the four-state pilot phase of the program in the early 1990s, only about 600 ever had to turn to Medicaid for additional help, Shelton says. The program has since been expanded, with LTC Partnership plans being offered in 40 states today. “It gives people the incentive to get the insurance,” Shelton says.
Shelton likes to remind clients that they could wind up a drain on state funds if they fail to plan ahead for long-term care. “When they do not plan, they’re taking a chance that they’re going to fall on the state budget,” she says. “And if they do that, they’ll be taking dollars away from their children’s or grandchildren’s education, public safety, all these things we want the state budget to do.”
And whether clients want to avoid leaning on their children or the government, that’s the real reason anyone buys long-term care insurance these days, Shelton says.
“The biggest objection to buying LTCI used to be, ‘That’s what my kids are for,’” Shelton says. “But those kids are older now. They took care of their parents, and now they’re saying, ‘We don’t want to be a burden!’ Because they’ve already done it; they know how hard it is.”
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