Baby boomers are a prime market for long term care insurance, and the workplace can be an ideal place to sell it to them.
Midlife boomers are increasingly aware that they need to pay attention to the possibility theyll face unforeseen LTC expenses after they retire. Many already are deeply involved in caring for their own parents or other aging relatives, LTC producers point out. The reason the worksite can be a good place to sell to them, producers say, is because many have the problems of their aging parents on their mind while they are on the job.
“Boomers are the caregivers,” points out Larry Lite, president, Lite Financial Services Inc., Albuquerque, N.M. And they are all too aware that ultimately they could be the care receivers.
“Many who are inquiring about long term care today are in their 40s and 50s, whereas a few years ago, it was people in their 60s and 70s,” Lite says.
Selling LTCI at work can be complicated, however. The agent will need ample time in terms of company meetings and face time with individual employees to make it work, Lite says.
“If an employer is onboard and believes truly in this type of product, it will be willing to give you enough time to put your pitch across,” he adds.
For producers, the most lucrative policies are for top executives. “More sales are going on in small businesses with 20 employees or less, because small corporations or sole proprietors might want to purchase this insurance as a key-man benefit,” Lite says.
Sharil Baxter, Kansas City sales manager and national education officer for LTCI Partners LLC, Madison, Wis., agrees.
“Where were seeing the most growth is in executive carveouts,” Baxter says. “The tax rules will allow the employer to discriminate, to decide which employees you want to cover. So, lots of businesses will pick the owner or partners only to participate.”
Many small business owners like the idea of deciding how much they want to spend on the benefit, she points out. “But its particularly attractive to C corporations because any amount of LTC premium is a business deduction to a C corporation, and most do pay the premium for their executives carveout,” Baxter explains.
Such plans are exempt from antidiscrimination rules imposed by the IRS on many executive-type benefits, Baxter says, so highly paid employees dont have to pay income tax on the employers contribution to the plan or on benefits received.
For that reason, a business thats trying to recruit, retain or reward senior managers or other essential employees will often want to add LTC carveouts as a way to enrich its benefits at a limited cost. “Its a very business-friendly benefit,” Baxter says.
LTC insurance also can be sold as a voluntary benefit, where the employee pays the premiums on his own. Barry J. Fisher, president, Barry J. Fisher Insurance Marketing Inc., Woodland Hills, Calif., says, however, that can be a tough sale.
“If you sell it on a voluntary basis, chances for participation go down,” Fisher says.
Fisher says the producer can expect to sign up less than 5% of a given employers workforce in the first year of a voluntary program.
The key to building participation is education, he says. “That includes educating employees how the product works and why they need it,” says Fisher. “For that reason, you have to get a lot of buy-in from the employer, because you have to have education meetings during workdays.”
Just how profitable an LTC benefit is depends on demographics. “If a group is in the right age and income level, if you get good employer support and you have a hard-hitting presentation, results can be better,” says Fisher. “What you want to look at is a group of at least 200 people. Out of these, maybe only 50 are likely eligible, so if you can pick off 10% to 15% of those, thats a good enrollment.”
Even better results can be obtained if you can get the employer to pick up some of the tab for LTC, Fisher says. “If you can get the employer to buy employees some minimum benefit, even if only $15 a month, then you can try to upgrade the employees to something more significant.”
In summary, LTC producers offer these words of advice to agents targeting boomers at work:
–Ask for a census or demographic profile of employees, to help you design an appropriate benefit program. “You want to see a lot of middle management and white-collar people,” says Fisher.
–Split out higher-compensated employees and key executives and design a separate LTC offering for each group.
If a producer is going to sell LTC profitably in the worksite, he should concentrate on selling it as an executive carveout, Baxter says. “Your success will be greater,” she says. “You can then offer LTC as a voluntary worksite benefit later, because if you get senior people enrolled, then they can become your ambassadors to other employees.”
–Do your homework. “You have to get educated about LTC, to understand it so you can explain it, as opposed to just selling a product,” Lite says.
Reproduced from National Underwriter Edition, July 22, 2004. Copyright 2004 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.