Rx For So-So LTC Sales: Identify Client Needs, Start Selling
By Jeff Sadler
It looks as if 2001 was another year of so-so sales in the long term care insurance market.
The picture is improving. But Im wondering when the industry will see sales quarters like it did in the last part of 1996. Thats when the fire sale raged as people rushed to "grandfather" in their non-qualified LTC plans before the new Health Insurance Portability and Accountability Act took effect.
From talking with several agents, Ive concluded there are a couple of clear reasons for the mediocre 2001 results, given the number of potential purchasers with sincere needs for this type of coverage.
The first reason is what I call the "DI problem." For years, disability income insurance has struggled to put strong numbers on the board, year after year.
Even at its peak in the early to mid-1980s, new DI premium rarely jumped as much as 20%. This has more to do with the nature of the product than lack of prospects.
DI insurance is, quite simply, a tough sell. Its a need that requires identification of the need, and this takes some work on the part of the agent. A financial analysis is necessary to expose this need, making it obvious to the client that DI is a solid resource should the client suffer a significant income loss by becoming unable to work.
Once the DI need is explained, then there is a small matter of what product best fits this client.
Here, the agent has to understand the difference between the two primary types of DI plans–"own occupation" and residualand be able to determine the proper recommendation based on the prospects occupation, duties performed, and how income is generated.
Then, the agent has to put the prospect through the underwriting gauntlet–no mean feat. When agents use a medical close with DI, "lets see if you can qualify for coverage," they arent kidding.
In short, the DI sale requires a lot of upfront time and may not result in a sale. There are fewer and fewer agents these days who want to take a chance on that scenario, which cuts down on the number of sales opportunities as a result.
