Why do people purchase insurance of any kind’ Could it be because they perceive a risk to themselves or someone else and would prefer to have an insurance company pay for it’ This must mean that the risk that they see is understandable to them. It would also make sense that when they look at the premium charged by the insurance company they recognize that the immediate pain of paying it is significantly less than the future loss. Otherwise, why would they purchase insurance’ In other words, they fear the risk enough to value the premium.
Those who fear the risk of getting sick, or maybe more importantly, want to be able to receive the medical treatment that they desire willingly pay for medical insurance. Individuals concerned about meeting a premature end of life freely purchase term life insurance to make sure that their spouse and children have a roof over their heads. People of wealth, who wish to pass their estates onto their family intact, gladly buy second-to-die or other life insurance products to pay the anticipated estate taxes.
None of these people need to purchase insurance. An individual contemplating the cost of medical insurance could choose not to and suffer the consequences. I think many more would make this decision if their employers didn’t pay all or part of their premiums as evidenced by the number of folks between jobs who remain uninsured. A person who buys life insurance to secure their spouse and family’s financial future might just as easily let them fend for themselves. Someone who buys life insurance to pay their estate taxes could have just as easily decided to let their heirs get what they get. Regardless, some personal self-protection or altruistic mechanism is in place that advises these people that insurance makes sense. Even more basic they have identified and understand a financial risk (or pain) that they would like to let an insurance company assume.
How do these people identify their risk(s) and decide that insurance is the best way to mitigate them’ Customs and habit are in play or maybe they learned from their parents. Some could have had a close call or experienced an uninsured tragedy along the way. Others wait until it is too late; how many times do you get a call from a consumer after they’ve been sick or injured and they no longer can qualify for coverage’ More often than not a diligent agent or financial advisor helps their clients see the risks that they face and develop strategies to help them cope. Regardless, the fear of the risk makes them value the premium.
This Socratic monologue has a point. I was speaking with one of my favorite agents and a long time friend yesterday. She’s a wiz when it comes to life and health insurance sales but struggles with long-term care insurance. Recently, she did some outreach to a group of clients regarding LTCi and got some responses. The most common; ‘how much does it cost” My friend didn’t know how to respond. My answer was, ‘Not as much as it will cost when then don’t have it and need it. Then describe the risk and talk about how to eliminate it.’
What are the risks of not having long-term care insurance when you need it’
- The future financial cost of long-term care; the $1,300,000+ the majority of 50-year olds will need in their 80’s to pay for the care that they want.
- The financial impact on the well spouse who may not have enough income to maintain their own lifestyle since the disabled spouse is sucking-up all of their retirement income and assets for care.
- The physical and emotional cost on family and friends who have to care for elderly disabled when there is no insurance to pay for quality care.
- The risks of having to receive care in a government run Medicaid nursing home.
- The embarrassment and personal degradation of having to rely on a family member to help you bathe or to change your soiled undergarments.
- Need I go on’
But many of these risks have not been socialized into the consumer’s mind such as the need for medical or life insurance. Or they take the cavalier attitude that when long-term care happens to them they will find their trusty .357 Magnum and off themselves. Have you ever had a prospect say that when they get sick instead of seeking medical care they are just going to blow their brains out’ Your response would be incredulity! No, clients expects the medical insurance to ‘cure’ them they just expect it to pay for the care that they want.
The challenge facing agents and financial professionals who want to sell long-term care insurance successfully is to stop thinking of themselves as a quoting service and begin acting as the risk managers that they are licensed to be. Insurance companies, agencies and call centers hire minimally qualified employees (some in countries on other continents) to generate insurance quotes for commodity-style insurance products where people already understand their risk, have some sense that the policies are all the same and where cost is the great differentiator. Long-term care insurance isn’t in this category yet and we should be happy about that. It means that we still have an important job to do.
Start with identifying the financial risk as this is the lynchpin for all else. If you are not already using our Pool of Money software you are starting with both hands tied behind your back. For more information visit our GoToPro website or contact your BJFIM/Paradigm marketer. I guarantee that once more of your clients understand the financial, physical and emotional risks that an unplanned for long-term care event presents to them, that a great many more will decide that long-term care insurance is very inexpensive.
http://www.twintierfinancial.com/the_uncommon_cents/2008/06/term-life.html