Making a strong case for LTC

There’s a way to successfully integrate long term care insurance (LTC) into an advisor’s practice, but it takes some work.

Client segmentation, credentialed staff, carefully scripted conversations and structured meetings all help to effectively integrate long term care insurance into an advisor’s practice, according to Greg Pearson, insurance specialist at Meckelborg Financial Group Inc. in Saskatoon. Pearson offered a series of tactics as solutions for what he considers lack of effective assimilation of long term care into advisor practices, at the LTC conference in Mississauga. The conference itself was organized by Munich Re and drew more than 400 eager advisors.

His emphasis on segmenting the client database to start the process reflects his belief that segmentation provides a demographic snapshot into the book of business, saving time when formulating recommendations. It begins with dividing clients by age, and then targeting those between 50 to 70 years of age.

“We mandated that everybody aged 50 to 70 had to have an LTC conversation,” he says, explaining that he found the greatest success rate between 53 to 67 years. Above 67, insurability often becomes an issue and below 53 the need for long term care coverage may not be easily demonstrable.

The segmentation process also includes checking marital status, because single people are exposed to more risk than married people. “So we thought it was incumbent upon us to speak to those people first,” Pearson says.

Segmenting by gender helps drill further down — females are more open to the LTC message since they often fulfill a caregiver’s role.

Moreover, Pearson believes that even during “couples” meetings, the female partner often drives the buying decision.

After a successful sales pitch, the follow-up and application process require careful handling.

“The person selling the contract is not necessarily the person writing the application,” Pearson notes, suggesting that a licensed assistant would usually take over after the sale is made.

Processing and follow-up are best handled through a team approach where each staff member has appropriate credentials and the client is made aware of the assistant’s expertise and availability for follow-up questions.

Making the sale

Explaining what government medical plans do and don’t cover forms a part of the sales process and can highlight the need for LTC coverage. The Canadian healthcare system provides acute care in emergencies such as a heart attack but cannot adequately provide ongoing care for an aging population living longer than ever.

A well-developed and scripted telephone conversation in which the advisor characterizes the health risk as the greatest threat to the client’s wealth and a face-to-face positioning conversation that extends and develops that theme comprise the next steps in the process.

“Unless you connect a person’s health to their wealth you’ll have difficulty selling long term care insurance,” Pearson says. “The greatest threat to depleting wealth in my mind is health.”

Pearson mines his client’s file before the meeting to find what he terms “the erosion factor”, suggesting that he has never discussed LTC as an estate preservation tool but as protecting capital during the client’s lifetime.

Mining the file may also provide clues to how the client can fund LTC premiums — whether through cash flow, de-registered money or insurance coverage that may have outlived its usefulness.

“I never met with a client unless I knew where we were going to get the premium from. It just doesn’t make sense,” Pearson says. “If you don’t know where they’re going to get the money from, how would they?”

Finally, the closing conversation includes anticipating objections such as needing time to consider by suggesting a trial application. That allows ample time for decision-making during the underwriting process, giving the client several months to decide whether to enroll in an LTC policy. “Why am I giving my client three months to make that decision? I’m managing any underwriting debacles without my client even knowing,” Pearson says.

Art Melo covers insurance for several publications.

(10/23/09)