Use high-deductibles health plans to attract high-net-worth clients.
Using health insurance to open doors to life insurance or financial planning opportunities is not a new concept. For years, savvy agents have led with health products to create customer relationships and then leveraged those sales to drive additional product and service sales.Daryl Bunch, a leading general agent for Life Investors Financial Group Inc., an AEGON company, has used this strategy for 25 years.
"When I first started in the industry in 1986, life investors, as we were known then, created a health insurance product specifically for self-employed individuals. We used that product to get to know our clients, and in doing so we often uncovered areas where their financial or insurance plan was lacking."
While the idea may not be new, the landscape of using health insurance as a door opener was altered in the mid-1990s by the launch of qualified high-deductible health plans and medical savings accounts, the precursors to health savings accounts. HSA-qualified plans are appealing to a wide variety of clients. Their relatively low cost makes them attractive to budget-conscious consumers, and their tax-advantage status provides value to high-income consumers. While there is some overlap in what these budget-conscious and high-income consumer groups look for in a plan, each requires a different sales strategy. Agents must be ready to adjust their presentations accordingly and build a personal brand that attracts the high-income segment.
Although most insurance agents consider themselves sales people, not brand managers, they need to realize that how they present themselves in the health sales process goes a long way in shaping how these customers think about them. The more conscious they are of creating a personal brand during the health sale, the more likely that brand will carry over to other product sales.
Sell the savings account
Initially, high-income clients immediately will focus on the tax advantages of an HSA plan. Because the tax savings play a large part in the purchase decision, it is important to make the savings account a part of your sales presentation, especially if you want your presentation to position you as a financial expert.
Access to an online platform for the savings account has moved from a selling feature to table stakes. A good presentation requires tools to show the clients how easy the account is to use. Flash demos are a powerful way to demonstrate how money is transferred between accounts and how it can be used to pay providers. High-quality leave-behinds that provide account information, such as current interest rates, minimum balance requirements and other account features, can help clients work through their purchase decisions.
In today's volatile economic climate, it is important to know the trustee's financial stability. Ask the trustee about the financial strength of the organization backing the accounts. If possible, speak with a member of the trustee's upper management so that you can use your relationship with them to build credibility in your client's mind.
Higher income clients are more likely to use the savings account to accumulate retirement savings as opposed to a method of funding their plan deductible. Your ability to clearly and accurately explain the investment options associated with the savings vehicle will be your first opportunity to earn their trust as a financial adviser. If the savings account does not have investment options, or if the options are not recognized brands, you are limiting your ability to position yourself as a financial professional.
Finally, make sure the savings account you choose can be set up while you are with the client. Look for an account that can be established with no initial deposit. In order to fund a health savings account the client must be covered by a qualified high-deductible health plan. If the health plan falls apart during underwriting, it is easier to close the account if no initial deposit was required.
Find plan differentiators
Defining your personal brand for high-income clients means building your brand around quality. Wealthy clients generally value quality over price, so skimping on plan benefits to save a couple of dollars on the premium is often a bad trade.
In his book, "The Millionaire Mind," Dr. Thomas Stanley indicates that the rich focus on the lifecycle cost of a purchase more than the initial purchase price. Even though the law sets the basic framework of a qualified high-deductible health plan, there are many ways plans differentiate themselves.
The most visible differentiator is how the health plan covers preventive care. Studies indicate that the likelihood of a person getting preventive medical care, such as routine physicals, increases as income increases. Plans that cover preventive care on a first-dollar basis may still be HSA-qualified. By having a valuable benefit like preventive care covered on a first-dollar basis, your client will have an annual reminder that you chose to show them a high-quality plan.
Another major differentiator among plans is the discounts that providers give health carriers for steering patients to their facilities. If the insurance carrier is bearing the majority of the cost sharing, like on a co-pay plan, discounts are not a major factor in selecting a plan. But because HSA plans have high cost-sharing, it is in your client's best interest to find which plans enjoy the biggest discounts from providers.
It is almost impossible to get data on provider discounts from either the carriers or the providers themselves, so we are left with imperfect indicators. Rates are the easiest source of comparison, especially if your carrier has multiple PPO networks. It is difficult to use rates as a proxy for discounts when comparing among carriers, since adjustments have to be made for benefit differentials, underwriting practices and carrier risk-tolerance. However, when the same carrier has several networks available in your market, it is a safe bet to assume the plan with the best discounts will have the lowest rates, too. By bringing discounts, not just rates, into your sales presentation, you are shifting the conversation from cost to value.
Conclusion
Health insurance is only a starting point for working with high-income clients. Your initial interactions with them will determine how the relationship progresses. Agents who want to position themselves as financial experts need to consider why their clients are purchasing particular health plans and then tailor their presentations to those needs. Using the same presentation for every client may make you a successful health insurance agent, but it may hold you back from selling multiple products within that household.
Dave Keller is senior vice president of IHC Health Solutions, a member of the IHC Group. For more information, Keller can be reached at Dave.Keller@thinkIHC.com or (952) 746-6614, or go to www.ihcgroup.com.
