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The Trends Issue: Getting creative in a tough LTCI market

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From the April 2009 Issue of Senior Market Advisor Magazine

There’s no question that it’s a tougher environment for long term care insurance sales. Nonetheless, some advisors are finding opportunities to grow their LTCI business. When the stock markets were generating consistently high returns, financial advisors often told their clients that they didn’t need LTCI because their assets allowed them to self-insure their long term care risk.

The bear market poked a hole in that theory, notes Jesse Slome, executive director of the American Association for Long Term Care Insurance. On a positive note, the decline in portfolio values eliminates the self-funding idea for many investors, while simultaneously making LTCI more valuable. “What producers are finding and what financial planners are saying to their clients is that it would be smart to have some of this insurance protection in place now, just in case the market doesn’t come back for 10 years,” says Slome.

David Pahl, an agent with Gelbwaks Insurance Services in Palm Beach Gardens, Fla., agrees with Slome’s assessment. Pahl says that one of the main marketing initiatives he’s undertaken recently is to revisit the self-insured argument with financial advisors and prospects who advocated it. “Five years ago, people felt that they were easily self-insurable,” says Pahl. “Now they’re looking at it and saying, ‘Wait a minute: I went from a $1 million net worth to $500,000, and if I have a long term care need for myself or my wife, how am I going to fund it?’”

Most prospects’ reduced net worth makes them more reluctant to spend their remaining funds on LTCI premiums, but Pahl says that concern over the inability to self-insure is a strong incentive to buy the coverage. “You have to tell people, ‘Hey, look, it’s not like it was three or four years ago. You’ve got to deal with the reality that presents itself today,’” he says. “You really have to position it that way.”

contract creativity
Carolyn Schultz, CLTC, of MassMutual Financial Group’s Oklahoma Agency in Tulsa, has had success by being creative in the way she structures policies. As an example, she cites her use of MassMutual’s Shared Care policy rider, which adds flexibility to the policies a couple buys and also helps control premiums. Schultz says that the rider allows each person to have his or her individual policy while providing another pool of benefits that the couple can share. “If one of them needs more coverage than their individual policy has, they can dip into that next pool,” she says. “It just gives them more flexibility.”

Bill Upson, CLU, ChFC and MDRT member, is president of Strategic Asset Management Group in Walnut Creek, Calif., and author of “Long-Term Care: Alternatives and Solutions.” He’s been selling an annuity that includes an LTC rider as an optional benefit, and he says that the response from clients has been very good. The rider allows the annuitant to access the LTC benefits after three years and a 120-day elimination period, which can run concurrently.

Upson points out that after three years, the policy will provide double the annuity’s income benefit as an LTCI benefit. The rider is enormously valuable, especially with those who could not otherwise qualify for LTCI. “I have one client who had senile dementia and there was no way I could get him covered, so we put a million dollars into one of these products,” Upson says. “He’s good for a few years, but probably by the time he gets to 74 or so, he’s going to need some significant help. That contract will pay out a minimum of at least $150,000 a year for the rest of his life, even if he lives 25 years.”

tech tools
Taking advantage of communications technology is another innovative method to generate business. Online business networking sites like LinkedIn offer another potential way to market your services online, as do blogs. Slome created a blog to share his views on the LTCI business and AALTCI affairs and he argues that online tools are very efficient marketing methods. “For any agent who’s not familiar with sources like LinkedIn, I think you need to be,” he says. “It takes less than an hour today to create a free, no-cost personalized blog that will be searched and indexed on Google and others, so that you can start posting information and maintaining it. For a couple of minutes a week, you can, if you do it intelligently and consistently, for no money, start creating a presence for yourself that is as big or bigger than any insurance company organization out there.”

partner with partnerships
The emergence of state-level LTCI partnership programs is helping Sharon Luker, CFP, CLTC and owner of LTC Planning Consultants in Plano, Texas. Her state’s program took effect February 15, 2009, and local news media were busy publicizing the start date. Luker receives most of her LTCI referrals from other professionals such as financial planners, accountants, and attorneys, and those professionals’ clients have been calling them to ask about partnership policies. Those professionals typically don’t know much about the program, so they’re asking Luker to update them. She’s taking advantage of the knowledge gap by calling her referral sources and offering to explain how the program will work and what it might mean for their clients.

Agents selling partnership policies must take at least eight hours of continuing education (CE) training, and some insurers are imposing that requirement to sell any of their LTC policies. That’s a burden for agents who sell a small number of policies each year, and Luker is reaching out to those producers as prospective referral sources. “Agents who were only selling one or two policies a year cannot write a policy unless they meet the CE requirements,” she says. “I tell them if they don’t want to do the eight hours of CE and just want to refer cases to the specialist, they’re talking to her.”

Click the links below to read the rest of The Trends Issue:

Playing it safe
By David Port

Even in a downturn life insurance proves its worth
By Joseph Finora

Use the 5 best marketing trends to get ahead in 2009
By Jim Lineweaver

When the going gets tough, the tough start selling
By Adrian Miller

Sidebar: Allianz Consumer Confidence Survey

Approximately one of every two survey respondents said they planned to keep a greater amount of cash reserves in bank accounts over the next 12 months.

Some 15% said they plan to invest more strongly in life insurance and annuities and 17% plan to increase stock investments. 83% of respondents said they were “very concerned” about the overall US and global economy with 43% noting that they were “very concerned” about their personal financial situation.


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