Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Long-Term Care Planning

The formula for the 'Five-Minute LTCI Sale'

Your article was successfully shared with the contacts you provided.

At a recent LTCI conference, I met Susan Blais, president of a California agency, who shared her success with what she calls the “Five-Minute LTCI Sale.” According to Blais, in five minutes she can discuss the critical issues of LTCI with a prospect and determine if they are interested in pursuing the subject further. This system was developed by Barry Fisher and Ron Hagelman, principals of Republic Marketing Group Inc., to help agents present the true value of LTCI simply and quickly.

Here are the key points she discusses:

Point 1: It is very likely that you will live a long life.

Point 2: It is very likely that you will need LTC.

Point 3: It will be very expensive and the cost today is not your problem. It is the inflated cost sometime in the future – 20 or 30 years from now – that you must plan ahead to provide those needed dollars.

Point 4: You have limited choices as to how to pay these costs. You will pay personally out of your retirement money; you will become a ward of the state; or you can transfer the risk to an insurance company. You take the risk or let the insurance company do it.

Point 5: The real value of this policy is not the dollars it will provide today, but the dollars to pay your claim when you need it down the road. How much money is going to be there when you need it?

Close: Is this a topic that you think we should discuss further?

The Five-Minute LTCI Sale includes a formula that helps prospects see that transferring the risk to an insurance company is the most cost-effective way to go. It shows how much LTC will cost when they need it, and most importantly, it shows the premium in relation to the pool of money that will be available when the client needs care.

The formula is simple. Begin with the cost of care in your region today. Then factor in your prospect’s age today and a projection of when they are likely to need care. Based on industry claims information, most people do not need long term care until their mid-80s.

Then apply a rate of inflation to your calculations. While we know the historical inflation rate in this sector is close to 6 percent compounded, we use 5 percent because that is what we have to sell in today’s policies. It also allows us to say to the prospect that our calculation is on the conservative side.

Finally, according to the recent claims studies, the vast majority of claims fall into the three- to five-year range. Using this information, you can provide a context for prospects to make an informed decision.

Here’s how Blais calculates it: Benefit Pool (when you go on claim) x Daily Benefit Sold Today x Number of Years (Days) Sold x Inflation Option Chosen x Length of Time Until Claim = Economic Benefit of the Policy (Face Amount).

Here’s a specific example. A client age 57 purchases an LTCI policy. The current cost of care is $200 per day. Client purchases a five-year benefit with 5 percent compounded inflation protection (1,825 days). The initial benefit pool = $365,000.

Next, what is the benefit pool when they will need the care? Based on the initial benefit pool ($365,000), projected first claim at age 85, typical claim of three to five years and rate of inflation benefit of 5 percent, if the client goes on claim at age 85 his benefit pool is worth $1,430,000.

To take the formula a step further, rather than saying, “Mr. Johnson, the premium is only $3,500 and for that you are getting $200 a day,” you can now put the premium rate into context that will be more appealing to the prospect: “For $3,500 a year, you will be receiving well over a million dollars of coverage.”

Margie Barrie is a principal of Hagelman Barrie Sales Training Solutions. For more about the Five-Minute LTCI Sale, visit


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.