Selling Long Term Care Insurance? Think Inside The Boxes
By Jonathan J. Neal
Thinking outside the box is a popular training phrase these days. However, when it comes to selling long term care insurance, it might be better to think inside the boxes.
LTCI can be broken into four groups of boxes. Staying in the boxes that fit your skills and abilities will save you time and make you money.
Examine the fundamentals of the long term care market and youll find it can be broken down into four smaller market boxes. (See Box One.)
The first box is for those people who have limited assets and live within their means.
These people need long term care insurance but more than likely cant afford lifetime coverage with a 5% compounded inflation rider. If they can only afford $100 per day for two years, it may not be enough to cover future needs, but they are still emphatically better off than they would be with no coverage at all.
These are the clients that pay their premiums out of their income streams. This is “Mr. & Mrs. Everyday-Hard-Working American.” They are the people with whom you must take great care when putting a plan in place. Their incomes are limited, and they will have the hardest time keeping a plan in force if they receive premium increases.
Affordability, not only at the time of sale, but with an eye out for the future, is paramount in these cases.
The second box is for those people who have a good net worth but unfortunately need all their assets to live on. I know a couple that have over $3 million in assets but need every dime to maintain their present lifestyle. Do they need long term care insurance? Absolutely! Can they afford it in their present financial state? No way!
Now, if you are a planner, you have your job cut out for you. On the other hand, if you have made the decision to sell only LTC insurance and dont have a thorough understanding of other financial tools, stay away from these people. What they need is a financial advisor who can bring them to grips with reality and help them get their lifestyle in line with their assets. Sure they need long term care insurance and may well get it down the road, but its not in the picture at this time.
This is the most frustrating prospect to work with–they meet the ideal LTCI prospect profile, you know they need long term care insurance, they know they need long term care insurance, they have the money and still they dont buy. They are the people that agents believe are in denial. They arent. They just cant afford the coverage in their present financial state.
The third box is for those people who have a nice living and have been able to put away some money. They are not what we would consider rich but do have between $100,000 and $500,000 in investible assets. These are truly the best prospects you can come across–not only do they have the need, they are also in the enviable position to be able to choose from all three long term care insurance vehicles, which we will cover later.
An agents ability to be successful with this group increases in direct relationship with his or her understanding of and ability to offer different types of coverage. After all, despite what so many believe, this is not a one-size-fits-all market. These people have options, and those sales professionals that bring options to the table will be successful in this market box.
The fourth box is for those people that have been successful and accumulated a handsome sum. Their net worth isnt the key here but rather that they have at least $100,000 in some type of income-producing vehicle such as a certificate of deposit, annuity, IRA or savings account. They dont need to draw income off of this money nor will they likely need to in the future.