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Life Health > Life Insurance > Term Insurance

The essential guide: Long Term Care

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Long term care insurance should be the ideal product for the baby boomers. Their parents’ experiences with deteriorating health and need for care is giving them a front-row seat on the problems of aging. The common, often unspoken assumption that “we’ll take care of mom and dad” has created a sandwich generation that’s being squeezed between their own families’ demands and their parents’ growing need for assistance. To make matters worse, many boomers who believed they could self-fund long term care exposure saw their portfolios shrink substantially during the bear market, increasing the risk of savings depletion due to long term care expense.

Even though the need is obvious for LTCI, sales stats reflect that the insurance has yet to penetrate the market very deeply. According to the American Association for Long Term Care Insurance’s 2009 Sourcebook, 8.25 million Americans have LTCI coverage; 400,000 of those policy owners purchased the coverage in 2008. But there are an estimated 74 million baby boomers, indicating a low rate of purchase.

Experienced LTCI sales reps are the first to admit that LTCI become a tougher sale than it was a few years ago. As one producer expressed a widely held attitude, “The low-hanging fruit has been plucked.” In other words, it’s much less common to encounter a qualified prospect who seeks out a LTCI adviser or who is anxious to buy the coverage after being approached. That doesn’t mean there’s no demand for the product, of course, but you should stay abreast of the following changes in the industry to increase the likelihood of success with less eager buyers.

The government’s role

Before his death, Senator Ted Kennedy introduced the Community Living Assistance Services and Supports Act of 2009. The law would create a LTCI program to provide coverage for adults who become functionally disabled. Although it’s only a small part of the ongoing debate over health care reform, the CLASS Act has thrown a wrench in the works for advisors because it is viewed as a potential competitor to the LTCI partnership programs that roughly two dozen states have implemented in recent years.

If you’re unfamiliar with partnership programs, it’s time to get up to speed because prospects are likely to ask about them. Partnership policies allow insureds to protect part of their assets while still qualifying for Medicaid. Here’s an example of how the contracts work, from the description of Florida’s program: “Traditionally, to be eligible for Medicaid, applicants’ assets cannot exceed certain financial eligibility thresholds. When applying for Medicaid long term care benefits, the program allows individuals who purchase qualifying insurance policies or certificates to retain one dollar in assets for each dollar of long term care insurance benefits paid by the policy or certificate. For example, the typical asset limit for an individual applying for Medicaid nursing home services is $2,000. If an applicant received $100,000 in benefits through a partnership program insurance policy or certificate, they may retain up to $102,000 in assets.”

If the CLASS Act becomes law, industry observers believe there is a significant risk that prospective buyers will procrastinate as they compare the Act’s coverage with partnership and private policies. Over time, however, consumers should realize that the CLASS coverage is limited; that will create sales opportunities for additional coverage to supplement or replace the CLASS-policies. Until the Act’s outcome is determined, the best strategy is to keep on top of its progress and be prepared to show how partnership and private policies provide prospects with better coverage.

Expanded networking opportunities

Marlys Fiterman, CSA, LTCP, is a partner with Newman Long Term Care in Minneapolis. She’s been selling LTCI since 2001 and works primarily with the clients of financial planners, CPAs and other advisors. Those sources have been sending fewer referrals since the economy slowed, so Fiterman has been actively expanding her networking efforts to include online venues. Although she was unfamiliar with online social networking tools at first, she took classes and enlisted a colleague’s aid to help her get up to speed. She now uses LinkedIn and maintains a blog to interact and build relationships with prospective referral sources; to date, the results have been good, she says.

Fiterman also continues to seek new, in-person networking opportunities. She has created an affinity group with her local Chamber of Commerce that allows insureds to receive a discount on LTCI coverage, and she has proposed a similar program at a school where she previously taught. She’s also active with the local chapter of Business Network International, which has chapters across the country. Members share business ideas, contacts and marketing referrals. “That’s been very helpful to me,” says Fiterman. “It’s an ongoing weekly meeting with 25 other professionals from different fields. We tell each other what our ideal referral is and carry business cards for each other. That kind of networking is extremely valuable and important in this market.”

Online sales

You can shop for and buy almost any product imaginable online – why not sell LTCI online? For Pattiane Baran, a partner with LTC Financial Partners in Lakewood, Ohio, shifting part of her business to Web-based marketing was born out of necessity. Nasty winter weather had created difficult driving conditions in Baran’s area so she turned to the Web to reduce her time on the roads. She created a Web site,, which provided detailed information about her services and LTCI; she also started using software that allows her to present her LTCI proposals to prospects over the Web. “People are doing more and more business online,” says Baran. “They are more comfortable dealing with people online than ever before, so I do my almost 95 percent of my consumer presentations using a system that allows the prospect to see my PC’s desktop while I talk to them on the phone.”

Baran doesn’t just present information online, though. Some of the carriers she works with have put application forms online; Baran and the clients electronically complete the application together, with her coaching on the phone. “It makes it very hands-on, as much as if you were sitting in front of the prospect. I’m limitless as far as where in the nation I can go, as long as I have a proper license and I’m duly certified with the state partnership plans that are out there as well. Of course, I like to go and meet clients face-to-face, but if they’re not local, they get to see me online.”

Selling online works for Baran, whom the AALTCI ranked as a top LTCI producer in 2008, but she notes that there are potential drawbacks. In any kind of sale, she says, the salesperson must learn how to read body language, something that’s not possible online. Instead, she’s required to listen and ask numerous questions to get the same degree of emotion and feedback that she could observe in person. “You have to turn on your other senses doubly hard,” she says. “You have to ask many, many more probing questions. I say in my front talk, ‘Today, because we’re meeting on the phone and I can’t see you face to face, I’m going to have to ask you a lot of questions. It’s not because I’m being nosy, but the more I know about you, the more I can at least help you figure out what’s going to be best in your specific situation. Is that okay?’ Once I get their permission, there’s nowhere I can’t go. I can find out their finances, I can find out about their children, I get to know who their children are. I make copious notes, and I have cheat sheets that I use to continuously ask many more questions.”

Group sales

LTCI advisors aren’t limited to the individual market. Selling group LTCI can assist in business diversification and provide a foothold in the business-owner market. Of course, many small businesses are slow and that’s affecting sales, but when the economy recovers, so should group sales. John Noble is director of long term care product markets at UNUM, a leading insurer in the group market. He notes that while sales are down nationwide for 2009, he’s optimistic. “Over 90 percent of our business has some employer funding,” he says. “Last year was a really good year for the group market. So far, just into the third quarter here of ’09, we’re definitely seeing a big concern from employers in funding any other benefits for employees. But from a group perspective, once we get stabilized with the economy and things start to pick up again, I see this as a great growth opportunity for many years to come. The worksite is the place that people gravitate to to buy employee benefits and the group long term care is a natural fit. As baby boomers aging every day, this product becomes much more important.”

Going with group coverage can also help with underwriting difficult cases, says Fiterman. She cites a recent case in which she was working with a couple, each of whom owned a small business. During the application interview she could see that the husband would qualify as a preferred risk but there might be a problem in getting a policy issued for the wife. Rather than risk having the wife’s application denied, Fiterman suggested the wife consider a simplified-issue group plan through her business. The strategy worked and the wife obtained coverage for herself and her employees.

The novelty is long gone from LTCI and it’s likely that the days of easy sales to eager buyers won’t return, and potential legislation and a weak economy will continue to dampen sales for the near term. That doesn’t mean it’s time to hang up your LTCI license. But it may be time to track the market’s trends and revamp your approach as needed.


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