Multilife products sold to small businesses are expected to be the leading growth area for long term care insurance sales in the near future, a survey of LTC insurance executives finds.
Simplified and lower-priced products were also expected to have the greatest growth potential, according to the survey of participants at the recent Intercompany Long Term Care Insurance annual conference in Jacksonville, Fla.
The survey, conducted exclusively for National Underwriter by Genworth Financial Inc., Richmond, Va., informally polled visitors to the conference, cosponsored by the Society of Actuaries, Schaumburg, Ill., and the ILTCI Conference Association, Woodland Hills, Calif.
Of around 90 industry executives responding to the survey, 42% predicted multilife sales to employers offered the best promise for sales growth, while 33% forecast simpler and more affordable products to offer the greatest potential.
Participants also expected professional intermediaries to be the richest source of prospects for LTC insurance.
Some 45% of respondents cited alliances between producers and centers of influence such as accountants, financial planners and attorneys to be the most fruitful prospecting technique.
Seminars for potential clients were cited by 40% are the most successful prospecting technique, well ahead of Internet marketing (cited by 9%) and direct mail (6%).
The results, while unscientific, confirm widespread experience of those in the industry, says a Genworth executive.
Working-age adults are increasingly thinking of their potential need for long term care, and the small-business market is a practical location to reach them, observes the executive, Kyle Rothery, vice president of product marketing for Genworth’s LTC insurance business.
The main decision-maker for small businesses is often a prime candidate for a solution that would solve long term care concerns for top executives and their spouses, she observes.
“It’s a lot easier for people to write a corporate check than a personal check, especial when it’s deductible as an ordinary and necessary business expense,” Rothery remarks.
At Genworth, multilife sales grew 18% in 2006, then 7% last year–still respectable in view of industry wide sales growth averaging 3%, she says.
LTC is becoming an ideal door opener to small business benefit sales, she says, allowing the business owner to offer a benefit that is also available to executives’ spouses tax free, she says.
Not only is LTC insurance a good way to start discussion with clients who are small-business owners but it’s also an effective way to establish networking opportunities with CPAs, attorneys and other trusted advisors who can introduce the producer to small business clients.
“It’s wonderful to be able to say to the advisor, ‘You don’t have to take money for this from the client’s retirement portfolio,’” she explains.
LTC carriers like Genworth have developed marketing materials such as tax guides that producers can offer to CPAs to help them understand such issues as the deductibility of LTC for C corporations and sole proprietorships, Rothery says.
Producers can look at the multilife market as a 2-part process, she advises: First, as an executive carve out. “You are dealing with only 1 decision-maker, and you can walk way with multiple premiums at one time,” she observes.
Second, the carve out can lead to another sales of LTC insurance as a voluntary program for the company’s rank and file. “You can cover a lot of folks and offer a significant amount of premium,” she says.
Small businesses consist of the fastest-growing segment of the business market, Rothery points out.
“Astute CPAs also have insurance markets,” she notes. “That’s a growing business for them. Many see the benefits of long term care planning and provide those services to their existing clients.”
One way for producers to start networking is to talk to their own personal advisors about what the producer does for a living, she advises, and even to try to sell the advisor on buying a policy for himself or perhaps as a carve-out program for his own company.
Another way to approach to networking is to ask clients for personal LTC policies if they have an advisor, such as a CPA, who might need to know about the just-purchased LTC policy, she suggests. Once the agent or broker meets the CPA, he or she can use that opportunity to build additional business with that advisor’s other clients, she suggests.
A final survey question asked what the biggest challenges brokers and carriers faced in recruiting LTC insurance agents.
The most common answer, cited by 42%, was that the product was difficult to understand.
In addition, 30% cited recent negative publicity about LTC insurance, including allegations that LTC products sometimes may be sold to unsuitable clients and that carriers may balk at paying legitimate claims.
Other problems cited were the lengthy sales processes, cited by 19%, and uncertainty about carriers’ commitment to the market, mentioned by 9%.
Despite such acknowledged problems, Rothery sees reasons to be upbeat about recruitment.
“With 73 million boomers barreling toward retirement, there’s a huge need for [LTC insurance],” she says. “Many people are starting to live it with their own parents, so denial, where no one wants to think about it, is becoming less of a problem. All those things make it one of the most exciting markets to be in.”
Bad publicity is not a large issue, she believes, because the industry has stabilized to the point where frequent exits from the business are no longer a factor, she believes.
“We’re back on a growth trajectory,” she says. “So I think more people will expand their practice to include long term care and maybe get into the market for the first time.”
Another reason is that carriers are coming out with multiple LTC product solutions, she says. “There’s a robust portfolio, so that any agent in the business can provide a long term care solution to anyone, anywhere,” she says. “There are more product solutions to offer to baby boomers, and they’re the folks who are going to be needing them. So all that negative stuff just sells newspapers, as far as I’m concerned.”