Rx For So-So LTC Sales: Identify Client Needs, Start Selling

By Jeff Sadler

It looks as if 2001 was another year of so-so sales in the long term care insurance market.

The picture is improving. But Im wondering when the industry will see sales quarters like it did in the last part of 1996. Thats when the fire sale raged as people rushed to “grandfather” in their non-qualified LTC plans before the new Health Insurance Portability and Accountability Act took effect.

From talking with several agents, Ive concluded there are a couple of clear reasons for the mediocre 2001 results, given the number of potential purchasers with sincere needs for this type of coverage.

The first reason is what I call the “DI problem.” For years, disability income insurance has struggled to put strong numbers on the board, year after year.

Even at its peak in the early to mid-1980s, new DI premium rarely jumped as much as 20%. This has more to do with the nature of the product than lack of prospects.

DI insurance is, quite simply, a tough sell. Its a need that requires identification of the need, and this takes some work on the part of the agent. A financial analysis is necessary to expose this need, making it obvious to the client that DI is a solid resource should the client suffer a significant income loss by becoming unable to work.

Once the DI need is explained, then there is a small matter of what product best fits this client.

Here, the agent has to understand the difference between the two primary types of DI plans–”own occupation” and residualand be able to determine the proper recommendation based on the prospects occupation, duties performed, and how income is generated.

Then, the agent has to put the prospect through the underwriting gauntlet–no mean feat. When agents use a medical close with DI, “lets see if you can qualify for coverage,” they arent kidding.

In short, the DI sale requires a lot of upfront time and may not result in a sale. There are fewer and fewer agents these days who want to take a chance on that scenario, which cuts down on the number of sales opportunities as a result.

LTC insurance sales present many of these same challenges in needs analysis, product complexity, and underwriting. A lack of enthusiasm for tackling this more difficult path to sales success seems evident.

The second reason is that many agents seem stuck in neutral over this product. For a number of reasons, LTC insurance has not become part of their everyday sales activity.

Much of this has to do with what I call a “Waiting for Godot” philosophy. You can always find reasons to procrastinate on doing what may seem to be a difficult task.

Many agents today say they are waiting for the above-the-line tax break. Or they are waiting for the product to be included in a Section 125 plan. Or they are waiting for the tax clarification for non-qualified plans.

This waiting further reduces the number of agents who are out there, vigorously uncovering LTC needs and closing sales.

If the reasons noted above are why you havent yet started perusing your client list for LTC prospects, dont hold off any longer or it may be 2010 before you are ready to begin.

There was a good chance for the above-the-line deduction this year, but it may not happen anytime soon with Congressional budget money committed elsewhere in the wake of September 11.

Section 125 is more problematic, since its potentially more costly to the government.

And either the Boston Red Sox or Chicago Cubs will win the World Series before non-qualified plans are commented on again by the Treasury Department.

Those individuals who have a LTC need seem to be increasing each year. Therefore, your New Years Resolution for 2002 should be to move your gear from neutral to drive and start helping people plan in advance for this potentially devastating future.

A few agents around the country do sell substantial amounts of LTC coverage. But the industry as a whole wont deliver the type of new business premium increases LTC warrants until there are a multitude of agents selling a few policies each year.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 21, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.


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