Imagine that you’re shopping for a new car and visit a dealer’s showroom to compare the models that you’re considering. You ask the salesman the usual questions about available options, performance and mileage, warranty coverage, etc. Although he’s affable enough, he won’t give you straight answers. Instead, he responds to your questions with vague marketing clich?s or tells you that he’ll have to ask his sales manager for more details. You quickly realize that he doesn’t know much about the cars and decide to take your business elsewhere.
Now put yourself in the position of a prospect who you’re presenting with an LTCI proposal. If you can’t provide solid, knowledgeable answers to this potential customer’s questions, he will start to doubt your expertise. Once that happens, he’s more likely to dismiss your proposal and will seek another advisor who can answer his queries.
Of course, you’re not applying for a job as an LTCI underwriter, so you don’t need Ph.D.-level knowledge about the coverage and policies. But you do need to know what you’re selling so you can anticipate and answer questions that prospects (who will range from uninformed to surprisingly product-savvy) are likely to ask.
Nancy Morith, CLU, CASL, LTCP and owner of NP Morith Inc. in Princeton, N.J., has been selling LTCI since 1989. She points out that consumers can gauge a producer’s product expertise early in their conversations. “When you have a depth of understanding of a subject, you are able to convey that to your client or your prospect in a way that shows,” she says. “It doesn’t mean that you’re dropping names or advanced degrees or anything like that to try to wow them. They just hear it because you’re coming from a different place than a producer who just is quoting off of a fact sheet.”
Jesse Slome, CLU, ChFC, and executive director of the American Association for Long-Term Care Insurance in Westlake Village, Calif., recommends that advisors start developing their product expertise by learning about LTCI’s major features and characteristics.
For example, it’s important to understand how reimbursement policies differ from cash policies, Slome says, because there are pros and cons to each approach. A contract’s treatment of elimination periods is another important provision to understand, as are the available inflation-protection options.
Genuine expertise goes beyond understanding policies’ features, however. LTCI carriers have different underwriting guidelines that have a direct impact on the applicant’s insurability and premiums. Advisors who sell LTCI only incidentally (less than five contracts per year) need to rely on external sources for underwriting insights, says Slome. “It’s not just rates and features–it’s health insurability that really is the most important consideration. And because it changes all the time, if you’re a broker, your best source for that information is the FMO, whether that’s a general agency or the larger national general agencies. Those are the people who are submitting multiple apps every day. They are the ones that are directly working with the health underwriters, and so what you want to do is seek their advice beforehand.”
There’s another element that your understanding of LTCI basics should include: the role of LTC partnership programs at the state level. These programs, officially known as Qualified State Long-Term Care Partnership programs, were authorized in the Deficit Reduction Act of 2005.