LifeHealth.com
Where are the LTCi sales?
by Karl Reinhold
Karl G. Reinhold, CLTC, CLU, ChFC, CFP, is a vice president of sales for John Hancock Long Term Care. He can be reached at kreinhold@jhancock.com.
Today, long term care insurance (LTCi) sales are still made in every segment of the market; but targeting the small to mid sized employer market can be particularly rewarding. Still largely untapped, this segment presents enormous opportunity for LTCi advisors. Experts estimate that there are more than 5.7 million businesses in the U.S. and fewer than 10,000 of them currently offer LTCi to their employees. And unlike other market segments, sales in the employer market have grown steadily over the last five years.
Automatic head start to sales
Just by virtue of the law of numbers, accessing a group can result in the sale of multiple individual insurance policies/contracts. Also, because the insurance is offered by an employer, employees who might not have even thought of it otherwise can become interested. And, those who are interested might be more inclined to trust the benefit offering because the employer is effectively "endorsing" the working product, taking the time to look into it and selecting a high quality carrier with a proposal offered at a competitive rate.
Win for the employer and employee
While seeking ways to attract, reward, and retain key employees, human resource professionals are currently facing two major concerns looming over the horizon: health care and retirement. While long term care insurance is neither of these, as a benefit offering, it can help alleviate issues associated with each, helping to attract and retain high quality employees.
The cost of health care and offering health insurance seems to be growing significantly every year. As employers stretch to provide this coverage, they have less to spend on other benefits. As a voluntary benefit, long term care insurance provides a way to add value to the employee benefit offering without incurring cost.
As this country's elderly population grows, it's not surprising that employees are facing a significant increase in caregiver duties for family members, with little or no support. This translates into lost productivity and retention for employers. Some of today's long term care insurance policies have provisions to help caregivers, which can mean more than money for the caregiver and the employer.
While there is much written about saving for retirement, how to do it, and whether employees will have saved enough, without protection, a long term care event for either the employee or their spouse/partner can deplete their savings in as little as two to five years. Long term care insurance provides a pool of money to help meet their needs so their retirement savings are not exhausted on long term care expenses.
Tapping the Market
Although it seems that long term care insurance solves many issues and no company should be without it, success is not necessarily a given. Getting into the market, even into each company one by one, takes strategy. And even then you may be only halfway there.
The small to mid-sized employer is demanding, particularly when it comes to getting the decision-makers to focus on providing or paying for a benefit such as long term care insurance. There are a whole range of educational needs about what long term care insurance is and how it can be offered. It's important to think about the goals of the program for the company and present them clearly and concisely around these topics.
Structure
Find out the company's reason for offering the plan, a voluntary benefit offering is quite different from an executive carve-out, though sometimes a company will have both for different groups of employees.
Product
Present a product that is easy to explain, in 30 minutes or less. This is important for the initial meeting with employers as well as for employee presentations.
Make sure there are inflation provisions to keep the benefit relevant.
Check for benefits that add value, for employees and the employer. For example, caregiver support services may be more appealing to employees who face caregiving duties well before needing any care themselves.
Administration
Particularly if different tiers of benefits are offered, make sure the billing will be user-friendly for the employer. This should be a part of discussion with the employer at the outset.
Corporate Finances/Benefits
If the company has not looked into offering LTCi previously, they may not be aware that premiums are generally tax deductible and not taxable income to the employee, or that the benefit payments are typically tax free. Of course, employers should consult their tax advisors as tax treatment is dependent on the employer's corporate structure.
The small to mid-sized employer sponsored market can open up a whole new source of LTCi business. Once the employer is sold on the plan and is willing to either pay for or proactively support the program, the employees are more likely to purchase long term care insurance. The employer endorsement goes a long way in helping you close sales.