Question. I’ve started mentioning long term care insurance to contacts who own small businesses. But I’m concerned about the voluntary enrollment being a failure, with virtually nobody participating. How can I increase the probability of having a successful case enrollment?
Answer. Your concerns are shared by many agents, particularly those who have provided other insurance products to the business. As a matter of fact, that happened to me on one of my first group cases. The broker who brought the case to our agency and I were so excited to have an interested prospect that we failed to do our due diligence. In retrospect, we should have thanked the company president, who wanted guaranteed enrollment because of a health problem and walked away from the “opportunity.”
Dr. Jeremy Pincus, a principal of Forbes Consulting Group, provided me with some of the findings from his company’s recent research study. The findings provide new insights on factors critical for success in the multilife market. A sample of his research conclusions is presented below:
- The type of business affects enrollment. High performance groups include law, government, chemical, university, energy and financial services. Medium performance groups include advertising/marketing, retail, manufacturing, aerospace/defense, publishing, biotech and technology. Low performance groups include telecom, health care and education.
- The area of the country where the company is located affects participation. The best participation happens in Texas. Advisors can expect medium participation in Wisconsin, Washington, D.C., Illinois, North Carolina, Nevada, Utah, California, Washington, Missouri, Virginia and Michigan. The lowest participation is found in the Northeast – Maine, Maryland, New York, Delaware, Pennsylvania and Connecticut.
- Smaller companies now show the strongest participation rates. This is a complete reversal of the 1990′s trend. For example, employers with up to 499 employees had approximately a 10 percent participation rate. The next category, those with 500 to 999 employees, had a rate only two-thirds that high.
- Participation peaks at average salaries in the $60,000 range. Avoid companies with very low and very high average salaries.
- Participation is higher among companies that offer a supplemental life policy where enrollment is over 40 percent.
- Offering payroll deduction increases participation.
- The number of plan choices definitely affects participation. Participation decreases more with every additional choice that employees must make.
- An optional return of premium benefit has a detrimental effect on enrollment.
- The availability of a low-cost option drives higher participation.
- When offered as an option, the longest benefit period consistently gets 60 percent to 80 percent of enrollment.
- For the compound inflation benefit, the higher cost raises doubts about the value of the protection, thus decreasing enrollment. But it does generate significantly higher case premiums. Average case premium with ABI is one-and-a-half times higher than case premium without ABI.
- An unsupportive employer is an enrollment killer. At least moderate support is essential.
- It takes eight or more direct communications to built awareness, educate and persuade employees to enroll in group LTCI.
- The best timing is immediately before the main benefits enrollment period. The worst timing is immediately after the enrollment period.
- September appears to be a particularly good month to enroll GLTC.