I am continually surprised not only that consumers still aren’t buying long term care insurance at the rate we expected but also that advisors still aren’t selling it with the gusto they should.
For LTC insurance professionals who have a passion for the business, it would seem that the fiscal conditions of LTC insurance financing and the upcoming demographic crunch of retiring baby boomers should easily result in double-digit sales growth every year. We’ve built the machine with quality carriers and distributors, encouraged and supported pro-LTC insurance legislation, and created awareness through advertising and public relations efforts. One would think that the only thing left is to sit back and wait for sales.
Unfortunately, there are still many reasons consumers are choosing not to buy and advisors to sell LTC insurance. It is important to understand some of the consumer and advisor objections, as well as appropriate tips for handling those objections.
The Consumer’s View
At the Eighth Annual Intercompany LTC insurance conference in March, America’s Health Insurance Plans, Washington, presented some recent consumer research that provided insight into factors influencing LTC insurance purchasing decisions. The research was the result of 4 focus groups and telephone surveys with 2,000 baby boomers. Here are the key concerns taken from the presentation and research:
1. “I don’t need LTC insurance because I already have long term care coverage.” An astonishing 30% of survey participants thought they already had LTC coverage because they believe that health insurance, Medicare, and long-term disability plans cover it. According to the National Association of Insurance Commissioners, Kansas City, Mo., the actual number of Americans with LTC insurance coverage is 5.2 million, and certainly not all of those are boomers. In fact, almost 25% of boomers believe they have coverage, when in fact they do not. These consumers need to work with a professional who explains what is needed to help secure fully their long term care future.
2. “LTC insurance is too expensive.” This objection goes hand in hand with understanding the cost of actual care. In a 15-year AHIP study of buyers and non-buyers entitled “Who Buys Long-Term Care Insurance,” 70% of non-buyers underestimated the cost of care, while only 13% of LTC insurance buyers did the same. From a premium perspective, the percentage of buyers spending 3% or less of their income on policy premiums went from 54% in 2000 to 67% in 2005. Unlike the odds of needing care, where the numbers are open to argument, the actual cost of daily care is not a debatable number, and its impact will be easily understood in the mind of a rational planner.
3.”I won’t need long term care.” With today’s longevity projections, it is extremely hard to find people who actually think they won’t need LTC in their lifetime. The AHIP survey showed that only 4% of respondents believed the chance of needing care is the one persuasive reason to buy LTC insurance, whereas 21% of survey responses cited the need to “not be a burden on my family” as the one reason to buy it. The fact is that long term care is not something people want to think about, and unfortunately much of the earlier LTC insurance sales efforts focused on the odds of needing care.