Middle-Income Boomers:A Good Market For LTC Insurance?

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Agents are split on how much interest there is in long term care insurance among middle-income boomers. But this may be because the concept of “middle-income” is different for different advisors.

For Dominick Mogavero, who defines middle-income as an annual income of between $45,000 and $75,000 and at least $100,000 in investable assets outside of a home, selling to this segment is mainly a matter of maneuvering funds to cover LTC premiums.

The LTC specialist with Strategic Financial Partners, Waltham, Mass., says there is interest among mid-income boomers.

“Most people are very concerned about costs and really unsure as to how to plan for it,” he says. “When we show them the liability, it logically makes sense for them to put the insurance in place and use the interest from their portfolio,” to cover the premiums.

One strategy is moving assets into an annuity contract and using the interest from that for LTC insurance premiums, Mogavero says.

He adds that interest in the product among mid-income boomers is there and its not at all difficult to sell to this segment.

This is what independent agent Thomas M. West Jr. has been reading in the trade journals. But it hasnt exactly been his experience.

The principal of West Insurance Agency, Birmingham, Ala., says middle-income boomers definitely are interested in the product. They ask for quotes and information about it but usually stop just short of buying, he says.

Amanda Chase, a State Farm agent who works out of Casselberry, Fla., agrees that the LTC insurance sale takes longer than do sales of other products.

“Initially its something (the clients) have to get comfortable with and think about,” she says. “The commitment to actually buy takes longer, I think, because they may have a couple of other major financial goals as a priority before LTC, such as finishing education funding for their kids and retirement funding.”

West suspects the reluctance to buy stems largely from being in good health.

“At that age their health is good and the health of their contemporaries is good,” he says. “Even though they know their health might deteriorate in the future, there is no sense of immediacy influencing them to make a buying decision.

“Most of my clients are in their 60s and 70s,” West says. “At that point they realize long term care insurance might be a more immediate need.”

Charles Berk, independent agent who runs Berk and Associates, Birmingham, Ala., says hes had a similar experience to Wests with selling LTC insurance to middle-income boomers. He largely finds they are reluctant to buy and was shocked when a younger boomer requested a meeting with him to talk about the product.

Shes a 41-year-old woman who had a personal experience with LTC.

“Her mothers in a home in Florida and she knew firsthand what the problems and costs are,” Berk says.

Having clients request a product “doesnt happen very often,” he says. “You have to market to people, but she wanted it. I would call her a pretty savvy boomer consumer.”

Chase says the interest among boomers “has not been there in the past, but it seems to be growing here [in Florida].”

More boomers are hearing about the product through the media and via the marketing done for the federal governments program, she says.

“It seems to have raised their awareness, along with dealing with their own parents needing long term care,” she says.

Chase talks to her clients about LTC insurance as part of her insurance and financial review, along with their other insurance needs, including disability and retirement planning, “because it affects their retirement planning whether theyre aware of it or not,” she says.

“I ask what they know about it and that helps me determine what part of the discussion we want to start at.”

Chase usually begins with education. Specifically, she talks about how LTC can affect the clients family and financial picture, how it fits into their goals, and that its crucial in protecting what theyre building.

“I think LTC is a longer sales and education process. You must first create awareness, showing how it works and how it can impact them,” she says.


Reproduced from National Underwriter Life & Health/Financial Services Edition, October 24, 2003. Copyright 2003 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.