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LTC In The Worksite Market: An Emerging Opportunity

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It seems that over the past couple of years, some agents and brokers have felt burned by the long term care insurance business. Companies long trusted have either changed their policies dramatically, raised rates beyond what we perceive as justifiable limits or simply just quit writing business altogether. I must admit, I felt the sting myself. So, some of us have treated LTC insurance like the unwanted stepchild.

However, every good agent who lasts in this business for more than 2 years can recognize a trend. It wasn’t so long ago that the disability market faced the same ups and downs before it leveled out to a reasonable and predictable market. All it takes is a little intuition and market savvy to bring everything back into perspective.

LTC insurance definitely has its place in the benefits market, right next to disability, life and health insurance.

The long-standing question is where to find the employer prospects that will trust you and depend on your advice? The answer to that question is simpler than you think. In the worksite setting, it has been said all throughout the industry that 95% of agents chase 5% of the population. This leaves the majority of all workers completely unmarked.

To tap into the worksite market for LTC insurance, you first need to contact your existing clients and tell them that you offer it. It’s straight out of Sales 101: “They won’t buy it if they don’t know you have it.” If you currently provide health insurance or disability, and definitely if you provide 401(k)s or any retirement planning program to a worksite, then you need to be offering LTC insurance.

If you sell LTC insurance but are not currently involved in the voluntary employee benefit marketplace, then the quickest way to enter it with your product is to find a health insurance agent or worksite producer who is active in that market. It is best to look for someone that may not be familiar with LTC insurance or with the companies that offer this type of product. Be sure that you strengthen your expertise in LTC insurance in general and the carriers that offer it because your know-how will be the most vital asset you can bring to the relationship.

The benefit you will gain from this relationship is your partner’s familiarity with the inner workings of the voluntary benefits arena. Also, be willing to sign a non-compete agreement with your worksite partner. It is important that each of your roles be clearly defined.

When a producer already has a relationship with an employer, the employer is generally very receptive of the idea of bringing in a new voluntary benefit option. The cost to the employer is minimal, simply adding a new payroll slot and some time for a few organizing meetings. Since the LTC insurance topic has recently been all over the media, it is easy enough to convince the employer that this is a valuable benefit that should be offered to their employees.

The success of the offering, however, depends on you. Employees rely on their employers to do all of the research and analyze the policies, companies and so on. This is a service you can provide to make the employer look like a hero without having to invest too much effort. You had better know what you are talking about when you are in front of the employer; therefore, or be partnered with someone who does.

The largest pitfall is that LTC insurance is often a difficult employee benefit to enroll. This is so is because the need for strong employee education is commonly overlooked. There are many ways to educate employees about the benefits of buying an LTC insurance policy. Whether they are young, middle-aged or close to retirement, planning is the key to educating them in the benefits. This need is identical to selling life insurance and disability insurance. Too many agents overlook this simple tool, which is thoroughly available for the other benefits they offer. If training and education for LTC insurance is promoted as readily as with these other benefits, enrollments are usually successful. Keep in mind that almost everyone you encounter has had a relative or someone they knew who needed some type of care or has helped in the care-giving process.

With an ever-aging workforce, the need and awareness of LTC insurance is becoming more apparent. More employers are looking for options within their own planning, and more employees are asking for it. Payroll deduction, discounts and simplified underwriting processes are a bonus to the employer and its employees. All the while, you get a captive audience. Everyone wins.

Executive carve-outs are also a great opportunity. This benefit works nicely with golden handcuffs, golden parachutes and golden handshakes–the programs that companies use to hire and retain top executive talent. Using limited pays (where premiums are paid for a specified period) and return-of-premiums are sure to take advantage of the many tax breaks. Since this is one of the few products left where IRS rules allow discrimination between executives and the rank-and-file, it is a prime product to offer when you call on your small or family business owners.

There are several reputable LTC insurance companies that offer a worksite LTC product that has simplified, modified and in some instances guaranteed-issue underwriting options. You can entertain groups as small as 5 employees with most carriers. In addition to the discounts ranging from 5% to 25%, some carriers will give greater discounts for employer contribution plans.

There are also reputable LTC insurance companies that offer a group product that offers the same underwriting flexibility options.

As with every voluntary benefit offering, it is your job to offer the best possible options and solutions to your clients, by studying the details of available worksite contracts and knowing what LTC options are available. No one worksite LTC policy contracts will fit all clients. Participation requirements vary from one carrier to the next, and policy provisions also vary.

If you approach this benefit as you have all of the others in your portfolio, you are sure to be successful.

With companies offering guaranteed issue and modified guaranteed issue with minimal participation requirements, why would you pass by such an amazingly simple opportunity to prosper with LTC insurance?


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