Changing LTCI sales approaches

Best practices

Achieving and sustaining that kind of growth will require advisors who today won't even touch the LTCI issue with clients to overcome their misgivings about addressing the product, says Slome. It will also mean convincing those who do talk about it to drop outdated or misguided approaches in favor of ones that better resonate with today's senior clients.

With the baby boomer generation expected to yield a huge crop of LTCI consumers, he points out, now is the time for advisors and producers who want a piece of that action to focus on tactics that really work. Read on as several LTCI experts share their best practices:

• Don't treat LTCI like an afterthought. "A lot of the financial planners I work with avoid long term care insurance like the plague," says Julie S. Hurst, CLTC, LTCP, CSA, principal at Wealth Preservation Strategies in Indianapolis. "It's the last thing they tend to raise with clients. Their attitude is, avoid, avoid, avoid." According to Hurst, the public's LTCI IQ has grown considerably of late – perhaps faster than that of the advisory community. More people now know enough about the product to bring it up in conversations with their advisors. Many of those might be solid LTCI prospects. Advisors who find themselves unprepared to knowledgably answer those inquiries not only could miss out on the sale, but ultimately may lose clients to advisors who know their stuff.
• Be patient. Don't expect instant gratification in the LTCI market. "The truth of the matter," says LTCI specialist Steve Elliott, principal at Capstone Financial Assurance in San Diego, "is that long term care insurance can be a pain in the butt if you're used to a quick sale. Most products, whether it's stocks, annuities or other types of insurance, don't have a real sales cycle. With [LTCI], we have a product that does not sell itself. There's a sales cycle that involves overcoming objections, fears and denial, going through need development, creating buy-in, then actually writing the business. The whole process can last months, where something like an annuity can be sold in a matter of hours or days."
• Be persistent. If it's clear LTCI is in a client's best interest, subtly remind him of that. "Just because you brought it up once doesn't mean you stop bringing it up," Hurst asserts. "Advisors should be reminding their clients every time they meet."
• Educate yourself. The more advisors know about products, features, carriers and the local market, says Elliott, the more options they will be able to present to clients and the better equipped they will be to find solid, cost-effective coverage. "In a very changeable market, I can sell over a lot of financial planners simply because I have a plan that's a better fit for the client. I understand the nuances of the product better than some planners might."
• Take the long view. Hurst acknowledges that many advisors are reluctant to invest the time and energy required to stay abreast of the LTCI market because they don't see their investment paying for itself. That, she says, is a dangerously shortsighted view. Clients tend to stick with advisors who offer solutions and leave those who don't. Enduring client relationships certainly bear more fruit for a practice than do ones that end with the client taking his business elsewhere. Also, though LTCI sales can mean devoting more time for a lower commission, high renewal rates mean more income down the road, Hurst notes.
• Ask thoughtful questions. The most efficient advisors know how to quickly separate the contenders from the pretenders among LTCI prospects. Often all it takes is one question to make the distinction, Elliott says. "Ask everyone you sit down with if they have had experience with a family member, friend or loved one needing care that caused them to wonder about needing long term care insurance for themselves. Their answer to that question will tell you whether they are in-market [for a policy]."
• Emphasize the affordability, not the expense, of LTCI. One of the most egregious errors an advisor can make, according to Slome, is to tell a client, "Yes, this is something you should consider, but it's expensive." Avoid talking about average premiums and other cost-related figures that may mislead because they come from outdated data derived from old policies. Instead, he says, show consumers how they can reduce the cost of a policy by buying one when they're younger and in good health, by sharing one with a spouse or partner, by insuring a couple instead of an individual, etc. "Many advisors sell Cadillac or Mercedes coverage to people who could get by with a Honda or a Toyota. Advisors who come along and say, 'I can show you how to reduce the cost of the product' will get a person's ear."
• Position yourself as a wealth protector and pitch LTCI accordingly. Let your clients know you're an advisor who offers the complete package: tools for wealth accumulation, distribution and protection. A general discussion about wealth protection – particularly with a person for whom leaving a financial legacy is a priority – often leads naturally to the subject of LTCI, Elliott says. "It's important to show the potential economic impact of a care event on a person's estate. Often a simple spreadsheet illustrating the cost of care is enough for them to understand the need. The point you're trying to get across is that they will be investing a small piece of their net worth [in a policy] to protect their entire net worth."
• Target business owners and in talking with them, tout tax advantages. Too often, says Slome, advisors neglect to mention to small business owners the tax savings that come from investments in LTCI. "Corporations can use 100-percent tax-deductible business dollars for long term care insurance for [business] owners and their spouses. Owners can select who receives corporate-paid coverage and premiums can be fully pre-paid prior to when the owner's retirement begins."

This May the AALTCI introduced a sales and marketing tool kit to help producers sell to business owners. Here the financial payoff can be especially rewarding, notes Slome, since owners of profitable business are more likely to buy higher-premium products to "maximize the tax-deductible advantages and let Uncle Sam share in the cost of their benefits."