When advisor Berry Brown recently closed a client on a long term care insurance policy, it was both a personal milestone for him and a harbinger for the LTCI marketplace as a whole.
“This was the first time I sold a policy to someone younger than me,” says the 44-year-old Brown, principal at Guardian Wealth Protection, an LTCI-focused firm in Wildwood, Mo. And the sale to someone that age wasn’t an aberration, he says, but rather an indication of a sharp rise in LTCI awareness and interest within the 40-something set. “Just in the last 18 months or so I’ve seen a lot of inquiries from people in their forties and early fifties. They are actually being proactive. Right now they are head and shoulders more informed [about LTCI] than people were 10 years ago. There’s very little denial anymore [about needing a policy to address the likelihood of needing some form of care]. The message is getting out there.”
The returns LTCI specialist Julie S. Hurst, CLTC, LTCP, CSA, received on a recent mailer helped convince her that LTCI market demographics are indeed shifting. “About 80 percent of the responses came from people ages 48 to 58. I was shocked.”
A surge in demand for LTCI among younger clients is good news for advisors like Brown and Hurst, who for years have been attempting to crack the 40-something demographic, only to find that their younger targets were largely indifferent to the product. So what’s behind the awakening? Why are more people in their 40s suddenly showing heightened interest in LTCI? And how are advisors accustomed to working with people in their 50s and 60s now gaining traction within an age group that historically has turned its back on the product?
The answers to those questions are rooted in the issue of need. From the buyer’s perspective, first-hand experiences with family members have persuaded more 40-somethings that LTCI is a product they need . “Lots of the inquiries I’m getting are from people in their 40s or 50s whose 75- or 80-year-old parents are going through all sorts of money for long term care, and often it is the kids writing the checks,” says Brown.
“What I’m hearing more from people now,” echoes Hurst, principal at Wealth Preservation Strategies in Indianapolis, “are the stories: Mom and dad own a [long term care insurance] policy or a parent is needing care right now and they see how expensive it is.”
From the seller’s perspective, meanwhile, more advisors and producers have discovered that the messages that tend to appeal to older prospects lack resonance with younger ones. It may have taken them awhile, but advisors have learned to tailor their messages specifically so that younger prospects understand LTCI is a product they may need well before retirement. “Trying to sell [LTCI] just as a retirement protection product or just on the basis of it being cheaper for a person to buy in their 40s is stupid,” says Scott A. Olson, CLTC, who sells LTCI policies primarily over the Internet via his www.LTCinsuranceshopper.com site. “You want to set it up as a product a person could need tomorrow. Stress that the reason to buy it sooner rather than later is because they may need to make a claim sooner rather than later.”
Advisors who are comfortable selling LTCI to seniors may find themselves in unfamiliar territory when attempting to make inroads in the 40-something segment. Some, like Olson, who estimates 10 percent of his client base now consists of people in that age group, have found a few tactics to be especially effective in convincing younger prospects LTCI is indeed a product to purchase now, not later:
- Suggest to clients that it behooves them to buy when they’re younger to qualify for preferred rates. It also behooves advisors to shop around, says Olson, since preferred rates can differ significantly, even among the top carriers.
- Today’s advanced medical detection capabilities place even more emphasis on buying a policy when healthy. “High-tech exams are identifying health conditions earlier,” notes Brown, “meaning insurance companies are finding out about things that in the past would not have come to light until later. And once they do find out, [LTCI] coverage suddenly becomes a lot more expensive and difficult to get. You have to be in darn near perfect health to get the best rate class.”
- Point out the shortcomings of disability insurance. “People think they’ll be OK because they have long-term disability insurance,” says Olson. “But what are they going to live on?”
- Be honest to create trust. Tell people they shouldn’t purchase a policy unless it fits comfortably within budget. “If it causes any kind of hardship, [buying a policy] is not yet an option,” says Brown.
- Mention tax breaks that appeal to younger business owners. LTCI premiums paid by a business on behalf of its employees and their spouses are fully tax-deductible.
Fewer hassles with 40-somethings
For advisors accustomed to working with older clients, plying the 40-something crowd with these kinds of messages can be both a refreshing and rewarding experience. From opening dialogue to delivery of a policy, the process can be much more efficient and angst-free with younger clients, Hurst observes. “They tend to process information faster, they’re less cautious and not so afraid to make decisions. And with younger clients, underwriting tends to be much easier. It makes the entire process move much faster. For the advisor, it takes away a lot of the hassle.”
There’s also the obvious financial advantage that comes with selling to younger people whose policies likely will be in force longer, notes Brown. “Chances are, you’re going to get a paycheck for many, many years to come.”
But the ramifications may be broader than that, he points out. A client who has had a positive LTCI purchasing experience might be more inclined to entrust the advisor with other aspects of a portfolio. “If you work with other products beside LTCI, your doing right by your clients earns you trust, which can lead to other opportunities.”
Those potential benefits, plus the diminishing resistance to LTCI among 40-somethings, make it easy to understand why advisors are zeroing in on younger prospects. “I have definitely changed my focus,” says Hurst, “to that 48-to-58 market.”
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