What causes a long-term care insurance sale to fizzle? It might be something out of your control. Or it could be you. Read on for some of the ways advisors sabotage their LTCI sales.
Not establishing the need
Clients with a family experience in long-term care understand the need for coverage. For others, it is critical to establish the need. Make sure your clients understand what the coverage is and what their risks are. Let them know the biggest misconception about Medicare is that it covers LTC costs. If they are thinking of self-insuring, ask them what assets they would liquidate first if there were a crisis.
Not getting expert advice
Very few advisors are LTC Insurance specialists, so they need to have an expert on call. Often that person may be a carrier wholesaler, but what if you want to consider all options and not just one? One example of that help is LTCI Partners’ assisted sale program, in which one of our long-term care specialists will do a conference call with you and your clients to explain the coverage to them and answer any of their questions. This helps your clients feel secure that all of their questions and concerns have been covered and to feel confident in their decision to purchase long-term care insurance. Occasionally, an advisor will attempt to rush the process. They will schedule clients for our Application Partner service (we call clients and complete the application by telephone) before the clients are sold on the product or understand the benefits and pricing. This typically does not end well.
Creating Analysis Paralysis
Some advisors like to show clients quotes from multiple carriers, with several different monthly benefits, 3, 4 and 5-year benefit periods, and other options. All of this is overwhelming and confusing to the client. If they don’t understand the product in the first place, showing them 12 different versions of it isn’t going to help.
Let us help you do the research on the best carrier for your client. Then present a good, better, best plan with that carrier. Your client will see choices at three price points. They can choose the plan that works best for their budget. This is the best way to avoid losing a sale due to the next item, which is:
Quoting too expensive a plan
Sometimes advisors think wealthy clients will agree to a very expensive long-term care plan: one with 6 years of coverage and a high monthly benefit. For a mature couple, such a plan might cost $12-14,000 a year. The couple is interested in long-term care protection, but they can’t bring themselves to agree to that expense. They say, “we need to think about it.” And that is the last thing you hear. If you give your clients two or three options at varying price points, you allow them to choose one that best meets their budget. Just for perspective, here are some average premiums our partners sold to couples in 2015:
For price-sensitive clients, $2,072 per person or $4,144 per couple per year
For middle income clients, $2,408 per person or $4,816 per couple per year
For upper income clients, $2,903 per person or $5,806 per couple per year
Read on for what causes advisors to “over quote” long-term care insurance.
Covering 100% of the risk
Some advisors quote a plan that covers all of the risk of a long-term care event. This includes the longest possible benefit period, say 6 years, and a high monthly benefit and a high inflation rider. This will result in an expensive plan that might not be affordable for your clients. Claims data show that the average length of long term care claims is 2.85 years (AALTCI Sourcebook 2014). Chances are, your client does not need five or six years of benefits. Long-term care protection is not an all or nothing thing. It is better for your clients to have protection against part of the risk than to have no protection at all.
Quoting the wrong rate
It’s tempting to quote long-term care insurance with a preferred rate since it’s 10-15% lower than the standard rate. However carriers recommend that you always quote the standard rate. Carriers issue policies at the lowest premium available based on the underwriting results. So your healthy clients who were quoted at standard will receive a pleasant surprise, when the policy is issued at the preferred rate. Your clients without preferred health will be hit with a higher premium than they applied for, which might cause them to walk away if they are budget conscious. For the easiest way to select the right rate, read on.
Failing to Pre-screening
Perform a basic pre-screen before writing a long-term care quote for your clients. If you can, email an underwriting questionnaire to your client. At the very least, basic information such as height and weight, prescription medications and if they have illnesses such as diabetes, can help us quote more accurately.
In summary, here are things successful advisors do to improve their LTCI sales
- Establish the need
- Use an expert such as LTCI Partners’ assisted sale service
- Quote no more than 3 benefit options with the same carrier
- Quote an affordable plan
- Remind clients that some coverage is better than no coverage at all
- Quote at a standard rate
- Pre-screen clients.