First I want to thank those of you who joined us on April 29th for our Prudential Long-Term Care Insurance Summit. More than 110 agents joined us to learn how easy it is to successfully reach the pinnacle of long-term care insurance sales success with simplified sales concepts and easy to issue multi-life products. It was great seeing many old friends and meeting new ones. The staff and I appreciate you taking the time to join us and we look forward to continuing to work with you; now onto my topic of the day.
In the May issue of California Broker, the cover story and related article are all about ?group? long-term care insurance. I certainly can agree with the author that employer sponsored long-term care insurance has a tremendous potential. As you know, we?ve been talking about it for several years now, and as many of you can attest, sales in this arena are increasing monthly. Some of the advice provided in the article actually has some value, particularly as it relates to the types of employer groups to target and the employee education necessary to successfully implement a plan.
But as my April 3rd blog posting (sorry, I took a bit of a break) points out, pigeonholing employer sponsored LTCi as a 15+ ?group? offering limits the agent?s thinking and marketplace. And, as earlier postings reveal, group products, particularly in the small employer setting, are not necessarily the best for consumers and clearly aren?t in the agent?s benefit either. The fact is that the May California Broker article continues the misconception that employer sponsored long-term care insurance is just a ?group? sale.
There are a vast of wealth of employer groups with less than 15 employees; very successful companies with highly compensated owners and key personnel. The same sorts of companies listed in the California Broker article; consulting firms, doctors? groups, law firms, engineer architects, financial firms and software professionals. The author of this article ignores highly profitable employer groups, owned by Baby Boomer entrepreneurs, looking to protect their retirement savings and income and would relish the opportunity to let the government pay a good portion of the premium through the simple wonders of tax deductibility.
The key is three! An employer group with three or more participating employees can purchase high quality individual long-term care insurance products, from two of the best LTCi carriers in the industry (A+ rated) using modified criteria that eliminates 90% of the underwriting hassles inherent in individual long-term care insurance. If the covered employees can answer ?NO? to a short list of simple underwriting questions the policies are issued; no attending physician statement, no phone interview; it makes long-term care insurance easier than ever. What?s more, one company will offer simplified underwriting to spouses with ten covered lives. This can be five employees and five spouses.
Do all of the employees need to be offered the same levels of coverage? No, Mr. Big can qualify for a generous benefit package and provide low cost core benefits to two other folks in the firm. And both of our multi-life carriers offer an employer sponsored discount that makes their competitive pricing even more attractive.
How much better are individual long-term care insurance products than group? As I?ve written in the past, individual products are owned by each insured, therefore, if they leave their employer, portability is not an issue. If the insured chooses to continue paying the premiums the policy is theirs. Also, individual policies are likely to be more rate stable than group products. And lest you think group LTCi premiums are less than individual, think again! In many cases, particularly after age 50, individual premiums are less than group.
And you, the agent, make out much better with multi-life long-term care insurance. Individual first year commissions are three to four times that of group and renewals and service fees are fully vested. No other agent can come in the back door and take customers away from you. Both you and your clients win big with individual multi-life long-term care insurance.
There is a place for true group long-term care insurance but it is rarely the call for smaller employer groups, particularly those under 250 employees. Look to multi-life long-term care insurance before you make the move to group.
Please reply to my Blog by clicking on ?comments? below or by writing me directly atbarry@paradigmins.com.
Hi there…Your link worked this time around…