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More Nontraditional Producers Are Selling LTC Insurance

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Financial planners and other nontraditional producers will have an increasingly important role to play in the long term care insurance business, says a long term care wholesaler.

CPAs, accountants, securities broker-dealers and banks also are getting involved, giving consumers more options than ever in obtaining coverage, said Steven Cain, director of LTC with Marsh Private Client Services, during a session of the Society of Actuaries’ Intercompany LTCI Conference here last week.

For brokers and independent reps, being able to offer LTC insurance is a way of cementing greater client control, he said. “We tell them if they’re not talking to their clients about long term care insurance, someone else is,” Cain said.

Cain’s Woodland Hills, Calif., company, a division of Marsh Inc., has seen significant growth in LTC insurance sold through such nontraditional channels, he said.

Broker-dealers are getting interested because their clients are asking about it. “They are fearful of harming their client relations because they don’t understand LTC,” Cain said.

Because only about 4% or 5% of the typical broker-dealer’s sales is insurance, they are not at ease with the complicated LTC sales process, he noted. They are more familiar with the quick turnaround of an annuity or mutual fund sale.

That is where the LTC broker comes in.

“You have to transactionalize the sale for the broker-dealer,” Cain said. “It’s still a long process, but you can take them through it step by step, do all the backroom services and support, the fact-finding, getting carrier quotes, and doing the case management.”

For registered reps, Cain offers a chance to earn a share of commissions for sales to clients they already have.

“We tell them they can add perhaps $50,000 of first-year income that’s sitting under their noses with their existing practice,” he said.

Karl Romero, a registered principal with Linsco Private Ledger, said he manages about $150 million in assets for his upscale clients. He told the audience he became more active in selling LTC insurance because he saw too many clients who ultimately needed long term care.

“It’s not a big part of our practice, but it’s important,” he said.

Romero liked the fact that lapse rates are low in LTC insurance. “It’s a good business,” he said. “LTC policies don’t move.”

Bruce Heymont, a financial planner with Linsco Private Ledger, said LTC insurance has grown to 15% of his business.

He is also doing more business on referrals from CPAs and other advisors who want to be able to help their clients buy LTC but don’t want to take on the responsibility of actually selling the insurance, he explained.

Like Romero, Heymont believes investment advisors can no longer afford to ignore the role of LTC in their clients’ financial plans.

“I don’t think you’re doing your job if you’re just managing investments without managing risk,” he said. “It’s a liability and professionalism issue.”