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LTCI undergoes an evolutionary change

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Getting the word out
The “Own Your Future” public awareness campaign is designed to increase understanding of long term care and LTCI. A collaboration among several government agencies with support from the National Governors Association, the project was started in January 2005. Its core activities are state-based direct-mail campaigns targeted to households with members between the ages of 45 and 70. Eileen Tell, senior vice president with Univita Health (formerly LTCG) in Natick, Mass., says her firm has been involved with the campaign and believes it is critical to increasing the public’s awareness.

“The research that we’ve done on the Own Your Future campaign shows that people who receive the planning guide are twice as likely to take some kind of action, be it buying long term care insurance, talking with family about their future preferences, talking to a financial planner or broker or looking into their existing coverage to see if it included long term care,” she says.

Reduced resistance
The weak economic climate gave clients and prospects another reason to avoid discussing LTCI, says Dan Forbes, CFP, with Forbes Financial Planning Inc. in Providence, R.I. As the economy and markets have started to recover, however, Forbes has found greater willingness to consider asset-protection strategies such as LTCI. He’s also seeing a shift in the desired contract benefits and is adapting his advice. “I try to advise clients to really focus on the daily allowance that they’re buying and not necessarily get lifetime coverage,” he says. “So they have some coverage in place, but it’s not necessarily a lifetime of coverage, which I think was the trend in earlier sales of long term care.”

Back-to-basics sales skills
Rob Cochran, LTCP, CLU, ChFC, owns Long Term Care Insurance Services LLC in Orlando, Fla., and is the author of “The Truth About Long Term Care Insurance.” He says one reason for reduced LTCI sales is that agents and the industry often pin their hopes on developing the perfect product that will eliminate all of the clients’ objections. That’s not the right approach, he believes.

“The reality is it’s probably always going to come down to convincing the prospect or client that this is an issue that they must face and deal with,” he says. “There are not only one or two reasons why people don’t address these issues, but rather 16 reasons that I’ve identified that we must be able to effectively overcome. Product design might make it easier to address one or two objections, but we’re still left with 14 other reasons. To me, those odds aren’t good enough.”

Many advisors assumed that since clients plan for everything else, it makes sense to plan for an event that is so likely to happen and so catastrophic if it does. Consequently, they think they can simply present a brand-name product with solid benefits and the prospect will sign up. The solution, he believes, is a return to the “blocking and tackling” basics of selling LTCI.

“They never realized how strong many people’s aversion is to even discussing the topic of planning for long term care or thinking about getting old and losing their independence,” he says.

Strong multi-life market
Phyllis Shelton, owner of LTC Consultants in Hendersonville, Tenn., points out that in 2008 51 percent of LTCI sales took place at work sites and multi-life sales grew 47 percent between 2007 and 2008. One important reason for that growth: simplified underwriting.

“I did my own survey about a year ago with several carriers and found that at age 65, about 30 percent of the applications are declined; at age 75 it’s more like 50 percent,” she says. “When you move into the work site and there is simplified underwriting, some companies have four, five or six questions, versus full underwriting, and some companies even offer that to working spouses.”

Adaption of hybrids
Another trend Shelton has observed is the development of combination or hybrid products, such as annuities that are coupled with LTCI. She anticipates significant activity in this area (after the key January 1, 2010 date) but notes wide variation among the products. Consequently, she is moderating a conference in late May that will focus on hybrids. “My observations are that there are no two (products) exactly alike” she says. ” As far as the actual cost of the long term care insurance premium piece, it’s lower than a traditional plan, because you have to understand people are really using their own money at first and then they have the potential to buy extra time.”

Improved education for producers
Harley Gordon, president of the Corporation for Long Term Care Certification Inc. in Newton, Mass., believes another important trend is carriers’ investment in education to encourage advisors to sell LTCI. Carriers, he says, particularly career shops that focus on higher-net-worth individuals, have decided that any sustainable production is generated not solely by focusing on product differentiation, but rather on giving agents compelling reasons why the product must be sold. Advisors don’t sell risk to an individual, Gordon believes. Instead, they educate clients about consequences to their family if an unexpected event occurs. They don’t focus on selling a product to protect the client but rather on creating a plan that will protect his family or those he cares about. “That’s the trend I see in education, developing and delivering a message that engages the advisor on a subject that is so important to their clients that they can no longer ignore it,” he says.


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