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October 01, 2006 at 08:00 PM
Many long term care companies are getting out of the business; many of those that are staying are planning significant premium rate increases. It’s not a question of whether these changes are going to upset old clients and make prospects uneasy – the answer to that is an unqualified yes. The real question is whether you as an agent are willing to make the necessary changes to stay competitive in this market
Those agents that continue to address the marketplace in the same old way with the same old presentations will be facing fewer and fewer sales and a corresponding decrease in income. On the other hand, those willing to redefine their prospecting, marketing and sales techniques will hear opportunity knocking at the door.
For years, many agents have assured prospects they need not worry about future rate increases, with this being a particularly strong point in a sales presentation. These claims were based on previous history, but in fact had no basis in reality. There has never been any sound actuarial or statistical data indicating that long term care insurance policies were in any way immune from rate increases. To the contrary, anyone who cared enough to look into the matter even a little realized increases had to come sooner or later.
So here we are like overmatched fighters facing a barrage of punches: * Fifty percent rate increases are being filed by companies and approved by state insurance departments. * Companies are leaving the business altogether. * Those companies staying in the market are increasing renewal rates and new policy premiums.
The key to surviving is to stop getting hit. To do that, you need to change your tactics.
The day of the one-size-fits-all spreadsheet salesperson is over. Way too many presentations have been based on a standard daily benefit approach: The agent goes out, gets a number of quotes and then puts them on a spreadsheet that is subsequently put in front of the prospect. The theory, of course, is that after seeing evidence of all the agent’s efforts, the prospect follows the agent’s advice and chooses the lowest premium.
Although this approach does eliminate a lot of competition, it tends to be a bit shy on reality. For one thing, it requires the assumption on the agent’s part that all the different LTCI needs can be met with the same standard benefit package. If we have learned anything about long term care services and patient needs, it is that they differ from place to place and person to person.
In the new long term care marketplace, benefits should be designed based on individual needs rather than standard dollar amounts. Now more than ever, the actual cost of LTC benefits needs to take into consideration the client’s available income along with any insurance.
Addressing the realities of the LTC marketplace will result in a more knowledgeable agent who, in turn, will provide better information to prospects and allow them to make more educated decisions. Ideas for change Let the prospect learn about the cost of long term care by participating in a needs-analysis worksheet. The use of standard, across-the-board numbers like $100 per day or $150 per day must be replaced with more realistic numbers that the prospect not only understands but also can see how they have been calculated.
To do this we use a long term care calculator that takes into consideration the actual dollars an individual has available for the possible LTC need and subtract that from that the actual local cost of LTC. Note we always suggest the use of local cost rather than national or state averages. There are a few variables we need to keep in mind when using the LTC calculator – one being a couple would use a lower LTC factor than an individual.
