Multi-life sales may represent the next wave for the senior market. For many senior advisors, this wide-open category is quickly becoming the fuel for sustained growth and business expansion as the industry evolves from a sales-driven culture to one of long-term problem solving.
A relatively tight labor market with employers seeking to retain talented workers and reduce costly turnover problems has helped prompt the search for someone who can help provide cost-effective benefits. What’s also helping is the government-supported phenomenon of turning more and more planning responsibility to the individual. As Social Security and Medicare/Medicaid continue to struggle to meet the needs of a burgeoning senior population, those who can fill the benefits breach will be in demand.
“The whole market is moving in this direction,” says Ted Burke of Beacon Benefits Consulting in Foxboro, Mass. Burke, who has a background in qualified-plan management, says networking with like-minded professionals from different disciplines is the key to building multi-life sales. “Know your core competencies and remain the hub of the wheel. Let everyone else be a spoke and leverage the relationship.”
Burke, who often helps companies get the most out of their 401(k) provider, says it’s good to act like the client’s “eye and ears” when looking for an opening to provide multi-life sales. “Know what the plan provides and what it doesn’t and get the client what he needs.”
It’s usually the leading advisors who will continue to bring forth new concepts in coverage. But Burke adds that it’s nearly impossible for one advisor to be all things to each client and there is a caveat when reaching out to others to provide additional services. Whenever bringing in an outside professional to augment your practice, be completely certain that that person is highly qualified and experienced. Any missteps will reflect negatively on the person who provided the recommendation.
“There’s no question that businesses want to retain key employees,” says Dan McCarty, an advisor with William Tell Financial in Latham, N.Y. “The challenge is for them to regularly improve employee benefits packages while staying within their budgets.” Products that commonly enhance multi-life sales include long term care and disability income insurance, but the marketplace is open to suggestions.
“Look at second-to-die policies,” McCarty says. “This can be just what a client needs. They often can buy more coverage for the same premium.” McCarty frequently helps clients double their coverage with the same premium. “It’s two lives but one estate. This gives them greater coverage and helps double the size of the estate they’ll leave heirs.”
“The multi-life segment is the undisputed growth engine of the disability income (DI) insurance market,” says Mark R. Ameigh, CLU, multi-life sales manager with Berkshire Life Insurance Company of America, in Pittsfield, Mass. “Individual DI coverage that is sold on a multi-life basis is fundamentally a business market concept, since coverage is sold to or through employers.”
Programs sold on this basis may include premium discounts, gender-neutral rates and, for groups of 10 or more employees, guaranteed issue. Multi-life supplements other employer-provided disability benefits such as group long term disability (LTD).
“The multi-life market is wide open,” says Tony Stratidis, career agency system channel manager for executive benefits at MassMutual. He says the concept began to grow “when carriers saw the possibility to cross over.”
Stratidis says multi-life prospects often can be created by working with top producers in other areas such as property and casualty, disability or life insurance, and basing projections upon the prior existing relationship. MassMutual also encourages advisors to grow multi-life sales in the executive carve-out and family owned business segments.
“This is a trend of the future,” Stratidis says. “More and more employees want insurance provided through the work site. They like the payroll deduction and the convenience.” Stratidis adds that demographics also support this trend.
“Most key executives and managers are in their late 40 and 50s,” he says. “Multi-life benefits go hand-in-hand with executive compensation and are also offered for employees’ spouses.”
“Multi-life disability income insurance is marketed most frequently by sales representatives who specialize in the employee- and executive-benefits arena,” Ameigh notes. “The sales process involves working with company benefit managers to identify gaps in employer-sponsored disability programs such as long-term disability. When combined with other group benefits, multi-life disability income insurance improves the quality and coverage level provided to employees. It’s usually most beneficial to key executives who are highly paid and subsequently under-insured by the standard benefits provided to rank-and-file employees.
From the employees’ side of the equation, family needs are also driving demand. According to the third annual Axa Equitable Life Insurance Company’s Retirement Scope survey (2006), 95 percent of working Americans believe the Social Security system is in trouble. That indicates that demand to provide income security and protection for a ballooning retiree population is growing, as is the need to provide various forms of long term care to this aging population.
LTC Financial Partners of Kirkland, Wash., pitches human resource professionals by offering in-depth long term care education for employees, as well as free in-home cost evaluations. “We make it available to every employee, spouse, family member and retiree,” says Dan Cahn, senior vice president at LTC Financial Partners. The company recently hosted a Web-based seminar that drew some 300 human resource professionals. The company generally enjoys 50 percent sign-up rates at presentations.
“The cost of employee caregiving is a big risk for employers,” says Ron Hagelman, a benefits consultant in New Braunfels, Texas. Nearly 22 million American workers are currently caregivers for parents or loved ones, according to a study conducted by the National Alliance for Caregiving and the AARP. The MetLife “Study of Employer Costs for Working Caregivers” estimates that accommodating caregivers costs U.S. employers between $11.4 and $29 billion in lost productivity.
The Family Medical Leave Act (1993) gives workers up to 12 weeks a year of unpaid leave to care for a family member. It does not assist those who cannot afford to take leave or pay for a professional caregiver. There are also restrictions depending on company size and amount of time employed. Those with long term care insurance for themselves and/or a close family member are more than two times as likely to continue working than those caring for a non-insured person. Private insurance enables families to afford professional caregiving.
Hagelman says he believes more companies will offer such benefits as employee demand grows. “Long term care is a form of asset protection,” Hagelman argues. “The cost of caregiving generally rises as a person ages. This is often when they need to protect employee assets and income.”
The leading objection to purchasing LTCI is the cost, according to the Connecticut Partnership for Long-Term Care. It suggests that most of the successful employer offerings have been those where the employer has contributed to premium cost. Employer contributions to LTCI were made easier in 1996 by federal legislation, which allowed LTCI to be treated in the same manner as health and accident insurance under the federal tax code. An employer contributing towards employees’ LTCI premiums can deduct contributions in the same way as those for health insurance. While LTCI cannot be included in a “cafeteria” or flexible-spending plan, the tax provisions provide employers with incentives.
LIMRA recently reported that the U.S. small business market is “ripe for growth of employee benefits, with about 10 percent of the nation’s small firms potentially poised to add benefits or offer them for the first time.” In “Growth Potential of the Small-Business Market” (2006), LIMRA reported that the current tight labor market, relatively low penetration for group life, health, and retirement benefits and general economic trends will encourage small businesses (those with up to 99 employees) to increase offerings. The skills needed to penetrate the multi-life market are similar to those often associated with more traditional one-on-one techniques, according to MassMutual’s Stratidis, but there are unique challenges as well. “Skill proficiency from the individual marketplace translates well into the multi-life area,” he says.
“The shift needs to move from the one-on-one ‘kitchen table’ approach to those mediated by companies, associations, and other groups,” Ameigh says. “With new incentives, we’re going to be reaching the other 90 percent. But that can’t happen quickly except through a multiplier effect.”
Senior advisors can enter this potentially rewarding area by communicating the benefits, working with like-minded professionals offering complementary services and by anticipating needs and working to fill them. But what works with one client might not with another. Items like company size and structure, as well as culture, each play a role. A success at a small company can be problematic at a larger one – and the reverse also can be true.
Experimentation with one’s approach is necessary to cultivate multi-life sales. It also can be helpful to gather professionals with different skills and backgrounds. Sharing knowledge and rewards together with carefully designed programs and the right technology and marketing support can open doors, but it’s vital to remain at the center of any new relationships.
“Employees want more benefits,” Stratidis says. “They see the need for them.” The employer can make it more attractive than getting it on one’s own, plus they can benefit with greater retention and loyalty. If there ever was a win-win situation for our industry, multi-life sales may be it.