Can Group And Blended Contracts Help Spark More LTC Sales?
The customer recognizes the long term care need. Companies develop a multitude of products to satisfy the LTC need. Multiple companies in the marketplace increase competition so competitively priced product is available. Theres awareness by customers that companies have developed the products.
It all seems like the beginning of a successful product life cycle and many sales success stories. But the product isnt being bought as expected. Sales have been faltering. Companies have exited the marketplace. Prices have increased.
The statistics are startling: According to Monitoring Attitudes of the Public 2004, a survey from the American Council of Life Insurers, Washington, 69% of affluent Americans “agreed that people need to protect themselves against long term care expenses.” This was consistent with 2002 findings showing 68% “felt being able to afford long-term nursing and home care was important in retirement planning.”
Who do consumers think will pay for LTC needs? In the same 2002 survey, 32% said “you or your spouse” and 21% said “long term care insurance.” So, over half the respondents felt that either self-paying or relying on LTC insurance was going to be essential to paying for LTC.
But LTC sales have been struggling. According to the 2003 Annual Executive Summary for LTC Insurance and Medicare Supplement report by LIMRA International, Windsor, Conn., there were 11% fewer individual buyers in 2003 compared with 2002. New premium decreased 7% bringing the compound annual growth rate for the 5-year period from 1998-2003 to only 4%.
Right need, wrong product? Perhaps. Certainly the demographics would indicate that LTC insurance protection should be a tremendous sales opportunity, but maybe its the product being sold and/or how it is sold?
While LTC sales and product development generally are focused on the individual marketplace, this is about to change as more companies pinpoint resources on group/worksite sales and “blended” individual policies to satisfy the LTC need. Well look at both prospects here.
Group LTC insurance. The ACLI survey indicated that 19% of individuals thought (incorrectly) that Medicare would pay for LTC needs and an additional 12% thought “health insurance” would provide the coverage. It certainly seems as if many individuals dont really understand what their group health plan or the government really will provide.