Mike Bacon has been in the long-term care (LTC) planning market for about 10 years, and he says that, from where he sits, that market looks fine.
He is not selling many stand-alone long-term care insurance (LTCI) policies these days. ”It’s fairly rare now,” he said.
But the East Lansing, Mich., agent said he has plenty of carriers to choose from, even when he’s talking to clients interested in stand-alone LTCI.
Carrier exits are overblown, he said. There may “only” be 14 carriers left, but “14 carriers is still a lot of choice,” Bacon (photo, right) said.
For more about why Bacon is happy with the state of the LTC planning market, and a little about how he gets the business that keeps him happy, read on.
1. He’s made peace with hybrids.
Some agents and brokers in the LTC planning market point out that stand-alone LTCI policies typically offer much better LTC benefits than hybrids, at a much lower price.
They shake their heads at consumers’ objections to buying LTC coverage they may never use, and wonder how many homeowners refuse to buy homeowners insurance because catastrophic fires are rare.
Bacon goes with the flow. ”You can explain all day long that, ‘You’re probably not collecting on your car insurance, are you?’” Bacon said. “It doesn’t convince anyone.”
Consumers like hybrids better because they like knowing that they’ll collect something in the form of LTC benefits or annuity income, or that beneficiaries will get a life insurance death benefit, Bacon said.
When clients do buy stand-alone LTCI, he’s comfortable with selling them coverage with a purchase-increase option, or modest inflation protection, rather than the 5 percent compound annual inflation protection option he might have sold 10 years ago.
LTC costs have not gone up that quickly in his area, and he said he’s noticed that just about all of the big LTCI premium increases apply to the inflation protection, not the original coverage.
He does still like policies set up in such a way that the coverage issuer takes care of paying the LTC provider.
Otherwise, he said, “Joe’s kids” still have to figure out how to deal with the LTC bills.
Another problem, he said, is that, in some bad cases, “Joe’s kid might just steal the money.”
2. He has come up with a simple, systematic approach to getting referrals.
Bacon said he has built a business by approaching agents who sell auto insurance, homeowners insurance, and small-group major medical coverage and offering to help their clients with senior products needs.
Bacon said the referring agents tell the clients, “You’re turning 65. You need to talk to our geezer guy. Here’s his phone number.”
Bacon also does seminars, and he said he finds the consumers who come to him because of the seminars do so an average of about two months later.
“I don’t know why it takes that long,” he said. “It just does.”
When he does Medicare seminars, he faces a formidable set of rules, such as a rule that he cannot display business cards. He can give out business cards only consumers who ask him for cards.
Medicare mystery shoppers have attended the seminars twice, and he said they were startled by how completely he obeyed Medicare seminar rules.
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3. He sells Medicare plans.
Following Medicare marketing rules maybe a challenge, but Bacon said he looked through his book of LTCI business recently and noticed something interesting: “Every LTCI case came from a Medicare case.”
In some cases, he said, the connection was indirect. In one case, the LTCI buyers were the children of the Medicare plan buyers.
But, in general, talking to consumers about Medicare seems to be a good way to get them thinking about the importance of LTC planning, Bacon said.