Achieving high enrollments for group long term care insurance benefits requires choosing the right client, well planned execution and thorough involvement of the employer in supporting the program, experts said during a session of the Intercompany Long Term Care Insurance annual conference, sponsored here last month by the Society of Actuaries.
Important clues to whether an employer group is right for the LTC sale include the educational levels and job types of the employees. Generally, the higher the employees’ job responsibilities, pay and education level, the better the chances for a profitable enrollment, said John O’Leary, marketing leader for group LTC, Genworth Financial.
To appeal to different income levels in the workforce, the offer should also include different plan designs, so employees can pick benefit levels that suit them, he added. In addition, producers should make sure the employer’s top executives and human resources staff agree to allow an enrollment campaign that touches each employee several times, including face-to-face meetings when practical with representative of the vendor.
Sometimes, though, potential clients don’t always fit the expected profile of the ideal prospect, noted Kevin Sypniewski, president and CEO of AGIS Network Inc., a company that works with benefit advisors to provide eldercare counseling to employees as well as group LTC.
For example, he approached one California K-12 school district with heavy union involvement and fairly low-paid teachers, averaging around $45,000 annually–generally, a group that experience showed had low potential.
“Were we jousting at windmills?” he remembers asking himself at the time.
Compared to his expectations, however, actual enrollment results were close to spectacular. Of all eligible employees, 22% signed up for the policy, compared to Sypniewski’s original estimate of 12% of employees, he reported. In addition, 5% of employees’ spouses or other family members signed up. Total annual premium was $300,000.
An important factor in the success was the employer’s support, with all principals in the school system participating in a 45-minute meeting with company representatives who described the merits of the LTC policy.
Successful enrollments, Sypniewski concluded, “can’t be driven by HR alone. You have to come in at the top and push the benefit down into the ranks.”
Rick Mines, director of business development for group LTC for John Hancock Life Insurance Company, described another case in which a West Coast municipality with 8,200 employees was pitched an LTC group policy with a choice of 5 daily maximums, ranging from $100 to $300. The offering was strictly voluntary, with no employer contribution.
Average employee age was 46 and average salary $56,000, with diverse job functions. Because employees were spread among a number of locations, it was difficult for the enrollment firm to reach them all, and expectations were relatively low for the case. Actual enrollment, however, was 13%, yielding $1 million in annual premiums, or $1,923 per individual. Of those who signed up, 28% chose relatively profitable policies offering compound inflation, Mines reported.
He attributed the success in large part to what he called “a paternalistic culture” in the municipality, along with great support from top management, including numerous internal messages and encouragement to attend meetings.
On the other hand, Sypniewski gave an example of an apparently solid prospect for group LTC that proved a relative bust. It was a high-end pharmaceutical company with 2,000 employees, mostly white collar and highly educated. They were well paid and, being concentrated at 2 main locations, relatively easy to reach. They already enjoyed a generous employer-paid base benefit plan, and the LTC policy itself would be partly employer funded.
In the end, however, just 8% of employees signed up, with an additional 2% of family members. Total annual premium was $300,000, respectable but well below expectations, Sypniewski said.
He attributed disappointing results to a number of factors: a new broker that was not yet well-known to employees, and a lack of meetings and other support by company executives for the LTC plan.
Sypniewski said the employer had a “check-the-box” attitude toward benefits. “It just wanted to put LTC on its list of offered benefits,” he said, so its HR people could check it off as they ran through the benefits package as they interviewed job candidates.