Call me an unreconstructed long-term care insurance guy but for the life of me I?ve never really seen the market niche for linked and or asset based long-term care insurance. In fact we?ve done a pretty fair job of telling agents why traditional long-term care insurance is the best buy for the vast majority of consumers. Don?t get me wrong; for the past ten or more years we?ve done our share of MoneyGuard (Lincoln National) and TLC (Genworth) quotes for scores of potential insureds. We?ve also spent more time than we?d like to admit analyzing asset based LTCi solutions trying to figure out when these products are in the consumer?s best interest.
Well, at last, a very patient guy from Texas, Ed Harris, CSA, CLTC, Genworth?s linked benefit product specialist, sat me down for about three hours to explain to me that I was missing the forest for the trees. Ed started with a simple declarative statement, ?stop thinking like a long-term care insurance agent?. ?You see?, Ed drawled, ?most people who purchase asset based long-term care insurance products have already said ?no?, at least once, to traditional products. They are after another solution and if you want to make the sale you need to get your head out of the place it?s in.?
Ed has a singular perspective and a whole lot of experience in the linked product field. He was involved with the original development of MoneyGuard and then moved to Genworth where he helped create TLC. He therefore has insights to product and consumer thinking that most of us have either overlooked or ignored; but more on Ed a bit later.
In my conversation with Ed I learned several rules that are now guiding us in seeing the market opportunities for asset based long-term care insurance solutions:
1. Asset-Based LTCi Buyers Are Typically Older: The average age of issue for asset-based products is 67. This differs from the typical purchaser of traditional LTCi by over a decade and, as the average age of issue for LTCi continues to drop, this disparity is likely to increase.
2. Most Asset-Based LTCi Buyers Have Already Said ?NO? to Traditional LTCi: Well, the woods ought to be full of these folks right? How many prospects have said to you that:
a. Traditional long-term care insurance just doesn?t? make sense to them; or
b. They think they can self-insure; or
c. Since it isn?t going to happen to them they don?t want to spend the money on LTCi; or
d. Who will get the money if I don?t use it?
e. Or all of the above?
Based on the fact that traditional LTCi market penetration seems to be stuck at about 9% and the number of times agents have relayed these sad objections to me, between numbers 1 and 2 above, you should have a shopping basket full of prospects that fit this profile.
3. Asset-Based LTCi Buyers Have At Least $1 Million In Investible Assets: This could be the show stopper for many folks who adhere to the objections above. However, the fact is that in order for an asset-based solution to work the insured must be willing and able to reposition liquid assets to fund a MoneyGuard or TLC product. This is usually in the form of:
a. A CD or emergency fund that they?ve set aside to pay for a long-term care event; or
b. An under performing asset in their investment portfolio; or
c. A liquid asset the client is willing to reposition because they see the need for some amount of long-term care leverage, but not traditional LTCi.
Of course, uncovering this money requires the agent to have knowledge of it, either through their ongoing planning activities with the client or through simple but skillful fact finding. I plan to write about this in a future posting.
As you can see, an asset-based long-term care insurance solution isn?t for everyone and the best prospects for it may very well be people who you have already passed by. They?ve either said ?no? to traditional coverage or plan and hope to take care of the problem in a fashion more suited to their thinking. Regardless, asset based clients are there, we just need to go find or rediscover them.
There?s one more issue that you might want to consider. The asset-based or linked product market boom is nearly upon us. Changes brought about by the Pension Protection Act are set to take place in 2010. Carriers are scrambling to get ahead of each other with product offerings that will take advantage of the new tax favored status that life and annuity products with long-term care benefits will have bestowed upon them. The need to become fluent in these programs and how they will interface with traditional LTCi products is fast approaching.
The good news is that Ed Harris has agreed to meet with 25 of our agents on June 25th to help them learn the secrets of asset-based long-term care insurance sales success. The requirement for attending the meeting is that you are appointed with BJFIM/Paradigm, have clients that fit the profile above and that you call me for details; (818) 444-7730. Brokers will be given a ?seat at the table? on a first come first serve basis so don?t delay in getting in touch.