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The odds are ... you'll need LTC

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Note: To view the charts referenced in this article, click here.

Q. I’m having trouble convincing prospects of the need for LTC insurance. Even though I spend time discussing this concern, somehow they don’t seem to get it. Can you suggest a method that has worked for other agents?

A. Convincing prospects of the need is one of the most difficult parts of the sale. For an approach to help explain the need, I turned to Phil Grossman, a very successful MetLife agent based in Peoria, Ariz., who has developed what he calls a Chart of Risks. He compares LTC to other areas where consumers have protected themselves by sharing the risk with an insurance company.

“I use the risk charts to explain that LTC is the greatest risk we face, and why should we treat it differently than the other three,” Phil says. He tells prospects that this is insurance that will cover you if an unfortunate event happens and discusses the probability of them experiencing this event. He shows them the charts (click here to see charts) and explains that these are industry figures that compare the probability of other insurances that you have already purchased to protect against loss and that you hope you will never use.

“The first is insurance on your home. How many times have you filed a claim where the total amount was more than $5,000? Ninety-nine percent of the people say ‘never.’ How long have you had a home? The person says 45 years. So what you are saying is that in 45 years, you have never filed a claim for more than $5,000?

“Then I ask, ‘did you cancel your homeowner’s insurance? You have not used it in 45 years, so I assume that you have come to the conclusion that it is a waste of time.’ He will probably say, ‘I have not canceled it.’ I ask why. The usual response is, ‘you never know.’ Then I show him the first chart, which illustrates that one out of 1,200 will experience a claim on their homeowner’s insurance of more than $5,000. I explain the reason you have this protection is for peace of mind.

“The next question I ask pertains to the odds of his car being totaled, so I ask if he has liability insurance. I structure my conversation similar to the home insurance discussion. The risk is five in 1,200 (chart 2). I use the same approach for the third risk — the odds of a large hospital bill, which is 105 in 1,200 (chart 3).

“The fourth risk is the odds of needing long term care — and this is 720 in 1,200 (chart 4). Doesn’t it make sense to you that we should take care of this risk in the way we have the other three? Should we take the next step to protect you against the risk of LTC, the same way you have done to protect yourself against the risk of a car accident?

“If he doesn’t agree, I ask “Why would you ignore the one with the greatest risk and spend money on the less-likely events? What you are saying is that you don”t think it could happen to you?’ “

Phil says he is very careful to tell prospects that this is not a right or wrong decision. It is their opinion based on education, information and their belief that if you own property, you insure it. If he can’t get a positive response to his comparison of risks, he then concludes the appointment and leaves the house.


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