Old clich?s about group LTC policies are no longer true
While individual long term care insurance sales remain relatively flat, the employer market for LTC insurance continues to grow. LTC insurance is gaining popularity because it can help employees protect retirement assets and provide support for working adults who need to give continuing care for elder family members. Companies are recognizing the morale- and productivity-boosting potential of LTC insurance and are buying in.
Behind the scenes, leading carriers are making large investments in corporate resources, such as in sophisticated Web site education and enrollment tools that are available to even the smallest groups. Additionally, the wall separating individual and group products is coming down, and new plans combining the most attractive features of both types of coverage are emerging in the marketplace.
Despite the promising outlook, many agents may be reluctant to revisit corporate LTC insurance because of a bad experience with a worksite case in the past. It's important to realize that some of these old problems now can be avoided.
We'd like to shed some light on the top five misconceptions about corporate LTC insurance:
1. Individual plans provide much better benefits than group plans. Or sometimes, producers have the opposite view: that group plans provide better benefits than individual plans. Many people think group and individual contacts are radically different.
This was often true 10 years ago, when a carrier's individual LTC insurance product offered features such as a 5% compound inflation rider that was not available on group plans. These policy differences are now less dramatic, however. Most group plans now offer inflation protection, limited pay options and other features often found in individual contracts.
2. Voluntary LTC insurance can be enrolled by a health benefits specialist.
Because it is an expensive product with large annual premiums, LTC insurance is sold, not purchased. One of the most important lessons we've learned is that a niche expert is most adept at enrolling voluntary LTC insurance–an LTC insurance specialist or financial advisor granted office space by the employer will produce better results.
3. An endorsement from human resources is the number one factor in a successful enrollment.
Human resources may be able to block a successful enrollment, but the key influencers for corporate LTC insurance are either the principals of the company or the executive compensation committee. It is imperative there be an overriding corporate decision to add LTC insurance–more than an "it would be nice to have it" mindset. We've learned this lesson the hard way on several occasions. If the top management is not a believer, give up on the case.
4. The amount of work in a corporate LTC insurance case is not worth the compensation.
Carriers are reconfiguring their compensation levels to meet the needs of corporate LTC insurance. Although level commissions are available for many groups, and consultant firms can net out commissions, we are seeing a trend toward higher first-year compensation for both multilife individual products and for group contracts. Broker-of-record rules are also being modified for corporate LTC insurance so producers who most contribute to a group contract receive the highest compensation.
5. Health underwriting can affect adversely the advisor's relationship with the client.
It's the old clich?: The owner's spouse will be the one who is declined, resulting in a ruined client relationship. Frankly, this occurred too often in the past and still can happen if underwriting is not thoroughly explained.
However, the availability of guaranteed issue and simplified issue programs are helping to reduce the number of such disappointments. For their part, agents and brokers are discussing underwriting thoroughly with the corporate client before talking about benefits, to avoid ill feelings if certain individuals are turned down.
Doug Schuetz is the group specialist for LTCI Partners LLC, Libertyville, Ill., a nationwide brokerage agency.
What's In Store
A Look At The Future Of Corporate LTC Insurance
?Convergence of individual and group distribution for all but the largest (1,000+ lives) groups.
?Continued expansion of tax incentives at state and federal level for purchase of LTC insurance.
?Continued growth of online enrollment and education tools that will make case installation much easier.
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