The most successful sales people have an instinct about where the marketplace is headed, where the next great opportunity lies. They're willing to reinvent their business models in order to support future growth. One of the best ways to deepen your current client relationships and create new business connections is through the sale of long term care (LTC) insurance.
Your clients, like the rest of us, are busy trying to navigate their way through one of the most challenging business environments to come along in some time. The economy remains uncertain, health care costs continue to spiral, and employees are looking for reassurance. Your clients depend on you to help them meet their employees' needs and their own. LTC insurance does just that.
Even if your benefits background doesn't include LTC insurance, it's easy to get started. Once you understand the compelling reasons for selling the benefit, the ways to identify a good prospect, and which product approaches are right for you and your clients, you'll realize that learning more about LTC insurance is well worth your time and effort.
Filling the Benefit Gap
The need for this important benefit has never been greater, because long term care may be the most significant uninsured risk that employees and their loved ones face. Let's begin by looking at the likelihood of need. Although most working-age adults may consider long term care to be an issue for the elderly, the fact is that it can happen at any time during your life, due to an accident or illness. And, that potential need does increase with age.
Now let's consider the cost of care. Long term care is expensive and, like everything else, costs are expected to rise. The national average for current nursing home confinements is approximately $75,000 annually, with projected costs in 30 years estimated to be $250,000. Those kind of costs could quickly deplete the most robust 401(k) or savings account. Even the national average for home health care, while less expensive than institutional care, is estimated at about $55,000 a year.
Unfortunately, these costs are not covered by other employee benefits. Health insurance may pay for hospital confinements or visits to the doctor but it does not pay for confinement in a nursing home or residence in an assisted living facility. And disability benefits are intended to replace income lost when you're unable to work -- not to pay for a home health aide to come to your home to feed or bathe you. Another consideration is that these benefits may end with termination of employment or retirement.
Employers are also learning that the need for long term care can impact workplace performance, in the form of "presenteeism," particularly when employees take on care giving responsibilities for loved ones. Presenteeism occurs when individuals are distracted at work, unable to be their most productive. It can create additional hardships for employers, who are struggling to do more with fewer employees. In fact, it is estimated that presenteeism costs U.S. employers an estimated $33.6 billion a year.
LTC coverage addresses these issues by offering portable insurance protection not found by other benefits. It represents a low-cost way to enhance an employers' benefits package and helps employers attract and retain top employees. LTC insurance can also diminish the effects of presenteeism by providing a valuable support network that can reduce the stress of care giving. When viewed from this perspective, LTC insurance fits in very nicely with the "wellness" trend where benefits that contribute to employee well-being (and thereby reduce employer costs) are in high demand.
Leveraging the Opportunity
If you're not selling LTC insurance, you may be missing the opportunity to expand your business by tapping into this enormous marketplace. The coverage has already been embraced by the Fortune 500 and is the second most requested employee benefit. Its untapped potential is enormous, with approximately 5.9 million small to midsize employers in the U.S. still lacking coverage.
The sale of LTC insurance can help you grow your income stream and even offset the losses you may have experienced with the smaller commissions that are quickly becoming the new reality in health insurance sales. But perhaps more critical, it can help you remain competitive by introducing your clients to a valuable benefit before anyone else does and can also be an entr?e to developing new client relationships.
Finding the Right Prospects
The sale of employer-sponsored long term care insurance is easier than you might think, especially if you have a well-established client base. The key factors to keep in mind during prospect evaluation are:
- Employee demographics
- Employer endorsement
- Funding approaches
Most LTC insurance benefits are sold on a voluntary basis, with employees paying the entire cost of the coverage. As with any voluntary benefit, employee demographics are critical to the success of the installation. In the case of LTC insurance, the ideal prospect is one where the employees are the right age, highly educated and well-compensated.
An employee, mid-40s, with an average annual salary in excess of $50,000 is best. This means that if your practice includes law firms, colleges, engineering firms or other professional groups, you're already ahead of the game. Or, you might consider approaching a professional association, and gain access to their employer members once you've made a case for LTC insurance with the group's leadership.
But demographics are only part of the picture. One of the most significant factors in predicting an enrollment's outcome is employer support. Employees rely on their employer's benefits expertise and due diligence in selecting the insurance carrier that will introduce and administer the new insurance coverage. In many cases, organizations with less than ideal demographics, but with strong employer endorsement, outperform "perfect" prospects with only lukewarm support.
Endorsement can be as simple as permitting the use of its logo to co-brand marketing materials and allowing carrier access to employees for use of e-mails, Webinars, etc., so that an effective educational campaign can be conducted.
For those prospects where demographics are weak, you may want to limit the offer of voluntary LTC insurance to a subset of employees, e.g., salaried or management. You also have the option to sell the benefit as an executive carve-out, where the employer chooses to reward key employees by paying the premiums. Or, employers may decide to pay for a modest core benefit for all employees, who are then permitted to "buy up" to higher coverage levels at their own expense. In each of these examples, employers who pay for all or a portion of the premiums are eligible for the same tax advantages they enjoy when paying for employee health insurance.
Selecting the Right Product
There are two basic approaches to employer-sponsored LTC that you can choose from - the sale of a "true group" product or the sale of a multilife product. Your choice depends on both the needs of your clients and your personal preference. Let's take a look at true group first.
True group LTC insurance, where the employer is also the policyholder, is usually best for organizations having more than 200 lives with a widely dispersed employee population. True group LTC insurance can usually be offered to actively-at-work employees on a guaranteed issue basis, a very attractive feature and one that most employers in this size range expect. True group LTC also allows for uniformity of benefits across the country, another priority for most large employers.
Employers will also appreciate the carrier-driven enrollment which represents a minimal amount of work for their human resource staff. Installation and on-going administrative tasks are conducted by a carrier-based account team that is led by an account executive who serves as the employer's single point of contact for all issues pertaining to the coverage.
Educational marketing campaigns have come a long way since the product was introduced more than 20 years ago and have taken full advantage of the technology that has been developed since that time. Employee Webinars and online enrollments mean that employees can learn about long term care and enroll at their convenience.
An online application rate of more than 80 percent is not unusual, since the process can be completed in just a few minutes. This approach also fits into the "green" philosophy that has been embraced by so many employers. For those employers who prefer on-site meetings, the carrier can provide personnel or will generally cover the cost of professional enrollers.
This carrier-driven installation can also work very well for you, since it can also provide you with substantial sales support from the initial quote through the finalist presentation. Once you've made the initial sale, you can turn installation responsibilities over to the carrier and move on to the next sales opportunity. Commissions for true group insurance are typically paid on a level basis, with heaped commission arrangements available in certain cases. Overall, you will likely see your income stream increase with subsequent re-enrollments, since almost all LTC insurance programs grow over time.But true group insurance may not be right for all of your clients. If most of your book of business is composed of small to midsize employers, then a multilife approach may be superior. With multilife LTC insurance, individual employees are the policyholders. While guaranteed issue coverage is not usually available to smaller employers, in many cases, a request for simplified issue (employees complete an abbreviated application with only a few medical questions) can be accommodated. Multilife also has the advantage of allowing employees to completely customize their coverage. In addition, various discounts may also be applied.
Multilife LTC insurance may appeal to you if you like the idea of having a "hands on" role during the enrollment, allowing you to deepen your relationship with your existing clients or demonstrate your benefits expertise to new ones. Many brokers enjoy conducting employee meetings and their one-on-one consultative approach can facilitate employee decision making. In addition, multlilife offers a heaped first-year commission structure.
Taking the Next Step
Once you're ready to reinvent your business to include LTC insurance, the carrier you choose to partner with is important to ensure that you and your clients get the support you both need. Carrier experience, commitment, and financial ratings are essential to ensure a smooth employer experience, not just during the installation, but over the long run. An experienced carrier can also shorten your LTC insurance learning curve, by offering you resources like an educational Web site or robust sales support. The right carrier will help you realize that expanding your business model to include LTC insurance may be the best decision you've ever made.
