LONG TERM CARE INSURANCE: FINDING A MARKETING STRATEGY

Rough Notes, Mar 2007 by Strazewski, Len

Need for the product spans various age groups

First, audit your clients' group health coverage and locate some savings opportunities. Then, get them to apply the windfall to long term care insurance (LTC).

They'll be happy you did-and you'll earn a sweet spot on their list of trusted advisors.

That's the way Becky Byrne, account executive at Western States Insurance in Missoula, Montana, opens the door to a benefit she says is indispensable for 21st century families.

With more than 300 employees and offices in 15 cities, Western States is one of the largest agencies in the West, with specialties in commercial insurance, construction bonds and group employee benefits.

Byrne, who has more than 15 years' experience as an employee benefits producer, says most employers are focused almost exclusively on their group health insurance plans-and the costs that increase practically every year. As a result, promoting group LTC can be difficult without some financial analysis of a client's employee benefits budget, Byrne says.

Group health renewals are an annual challenge, she admits, but as the agency sharpens its pencils for new and continuing clients, Byrne says the firm has had pretty good luck finding ways to trim costs and restructure coverage to free up some benefit dollars.

"Once you have demonstrated your ability to save some money, clients can be more open to the idea of spending some of those savings on additional benefits. But LTC can be a tough product to market, depending upon the leadership of your customer," she says.

The next step in Byrne's LTC marketing plan involves meeting top executives or business owners to make the case for using the new-found resources on a new benefit: LTC. But one sales pitch does not fit all.

As seniors live longer by managing chronic diseases, LTC is becoming a more important insurance product and a more popular employee benefit, Byrne observes; but selling the coverage requires an agent to educate clients on the value of the coverage for each generation.

"Demographics matter," she says. Because LTC is often perceived as an employee benefit for the aging, young executives in their 40s don't see the coverage as a benefit for themselves, although they may understand its value for older employees or dependents.

"Executives in their 50s and 60s may see the value for themselves or their families but may perceive the cost of the benefit as beyond the resources of their firm," Byrne says.

LTC insurance indemnifies policyholders for the expense of care necessary to assist them with activities of daily living (ADD, which may include nursing home or assisted-living institutions or home care. The coverage is usually structured to pay up to a monthly maximum over an established coverage period, usually three to five years.

In some states, the LTC funding can also be tied to payouts from an annuity or the cash value of a universal life insurance policy.

Group LTC is generally offered to employees who receive the coverage themselves, and they also may be able to purchase coverage for their dependents and non-dependent parents.

Group LTC programs usually offer employees a maximum base benefit of $200 per month for a three year-period and offer opportunities for employees to increase coverage or add inflation protection on a voluntary basis, Byrne says. Leading LTC insurers, including UnumProvident and MetLife, offer group plans with limited or no medical underwriting, which simplifies administration for employers.

LTC insurance is also available on a voluntary, employee-pay-all basis, although Byrne advises agents to focus on group programs rather than individual voluntary payroll marketing.

"When an employer makes a commitment to offer group coverage, it really sends a message to employees about the value and importance of this benefit and strongly supports the voluntary purchase of expanded coverage," she says.

LTC isn't cheap

Permanent rates vary by age as well as some medical underwriting factors, so the voluntary coverage is less expensive if purchased at a younger age. However, LTC insurance isn't cheap.

According to the American Association for Long-Term Care Insurance, a trade group in Westlake Village, California, the average annual cost of coverage for a 55-year-old purchaser ranges from $775 to $1,500, depending on coverage limits and underwriting factors.

Emotion can play a powerful role in the LTC insurance purchasing decision, adds Wilma G. Anderson, president of Senior Care Associates in Littleton, Colorado. Anderson, who calls herself "The LTC Coach," has been advising agents, brokers, employers and retirees about ways to provide long term care since 1988.

Producers have had the greatest success marketing LTC insurance to employers with 200 or more employees, she notes, and smaller firms are a relatively untapped market for agents and brokers who already have a commercial property/ casualty insurance relationship.

Like Byrne, Anderson recommends that agents and brokers seek an informational meeting with senior executives of their commercial clients, preferably including the chief executive officer and human resources director.