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Layers, part 1

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Jesse Slome has been talking at events and interviews about coming up with a new paradigm for long-term care insurance. Here’s the first part of a version of the argument that he presented recently at the National LTC Insurance Summit.

Imagine for a minute that it’s 2004 — and that we are all auto dealers … not in the insurance business.

Gas costs $1.85 a gallon … and those of you who are Hummer dealers sold 29,000 cars. You’re laughing at those Prius dealers. Sure they sold more cars … but who wants that contraption.

Now fast forward three years. It’s 2007. Gas hits a record high of $3.07 a gallon. Hummer H2 sales plummet from 29,000 cars just 3 years ago … to 12,431. Hummer dealers are not laughing.

By 2010 they are crying. Because on February 19, 2010, General Motors announces it is ceasing the Hummer line. Shut your doors Hummer dealers. Oh, by the way, remember those Prius dealers you used to laugh at. In 2010 they sold 141,000 Priuses.

Throughout history, every market, and every product, evolves and changes. 

Evolution occurs for so many reasons. An evolution of technology … an evolution of needs and wants. And, certainly a changing economy will impact markets and products.

You cannot deny that the American economy has changed. Whether you call it The Great Recession, or just another recession, we have just lived through a change that has impacted us all. It certainly has impacted your clients and those people you hope to call ‘prospects’ in the years to come. 

The economy has certainly impacted insurers.

So, if you accept that the world has changed — the real question you should be asking is, “What does this change mean to me?

That’s what I’m going to address. Before I do, I want to acknowledge that I know not everyone will agree with my comments. And, that’s okay. I’m not asking you to change.

When scientists study how people respond to change – they identify five behaviors. 

There are innovators, the first to adopt an innovation. They are risk takers. But they also stand to gain the most if they are right.

There are early adapters. Sometimes we refer to them as trendsetters. Those are the folks who stood in line to get the iPhone 5.

There is the early majority. They tend to act more slowly before adopting a new idea. This is probably the largest category where most people fall.

Then there is the late majority. They wait until lots of other people have made their move. Then it’s time to finally act.

And, lastly there are what scientists call laggards. They focus on traditions. They tend to have low social status … and generally they are older.

For long-term care insurance (LTCi) producers, I believe there are two other definitions that are far more important.

There are those who are pretty comfortable with what they are doing and what they have achieved financially. You may have no desire to change no need to change and that’s okay.

But, there are also those here this morning who say “I want more. I’m just starting. I want to see my sales grow dramatically. I need to see my sales grow dramatically.”

This talk is really targeted for you.

Because the world of long-term care insurance has changed, and what I encourage you to seize on, to focus on, and to profit from, is the new and improved long-term care insurance.

Ever wonder why common, everyday products — like detergent — like toothpaste — the products we know and buy regularly rebrand  themselves as “New & Improved”?

They do it because it’s a powerful way to get consumers — and we are all consumers — to stop and think. Something has changed. And, with rare exception, such as New Coke, “New & Improved” translates in our minds to better. 

And, we all want better.

So, welcome to the world of New & Improved Long-Term Care Insurance.

This is a message the American Association for Long-Term Care Insurance will be communicating to consumers.

Why does the world need a New & Improved LTCi approach? Because you can only sell a product that people can afford. The more people who can afford what you are selling, the more people who will buy it. As President Clinton declared, “It’s math!”

You want more sales, offer a more affordable solution.

You want more sales, drop what I call the “Old Think” and pick up the “New Think” … the New Think associated with New & Improved LTCi.

Here’s what I mean by “Old Think”

Old think: Buying LTC insurance is a one-and-done process.  We’ll design a plan and you’ll be all set. 

It worked — when buyers were in their mid 60s. It worked when investment returns were high — and premiums were affordable. The good old days … back when Hummer dealers were all happy fellows.

New think: New & Improved LTC Insurance will now involve taking a “layered approach.” Just like people layer bank CDs to maximize their investment return, and just like one should diversify investments, it now makes sense to layer how you buy LTCi. And, in my opinion, the best way to do that is by selecting a future purchase option.

The New & Improved Layered Approach will resonate with buyers in their 50s. And, that’s where the market is today. And, where the greatest growth over the next few years will come from.

Next week: What should go into those New & Improved LTCi layers? 

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