Due to our country’s recession and the current economic environment, voluntary long term care (LTC) insurance programs are far more common than employer-paid arrangements. With corporate budgets tight and the economy still brimming with uncertainty, that’s not likely to change anytime soon.
Voluntary benefits present a classic good news/bad news proposition. On the positive side, it’s far easier to persuade an employer to adopt a program that will cost nothing or very little in company money or time. On the other hand, producers have to work harder to motivate individual employees to take advantage of what’s being offered.
Though I’ve spent roughly 16 years in the LTC insurance business myself, I’m always eager to learn from those who’ve demonstrated their own success. I recently touched base with Jerry Manning, the founder and president of Chicago-based J. Manning & Associates, who was recently named the top group LTC insurance broker in the nation by the American Association for Long-Term Care Insurance.
This recognition was based on 2010 premiums.
While voluntary programs outnumber employer-paid programs, Manning was quick to point out that he doesn’t assume that’s the route a company will take.
“I don’t specifically market voluntary programs. My first goal is to initiate a discussion about LTC insurance to see if it’s a good fit for the organization and then help an employer determine the premium approach that makes sense,” says Manning.
Winning Over Employers
As with any courtship, success starts with finding a compatible match. In the group LTC insurance arena, that comes down to looking for a few key traits:
Age. Since younger individuals have other priorities, look for employers with a substantial number of employees over 40.
Income. Because LTC insurance protects assets from LTC expenses, you’ll want to find employees who actually have savings to protect. Income is a fairly reliable indicator; look for groups with employees earning more than $50,000 annually.
Occupation. Workers in professional jobs who require higher education—such as lawyers, accountants and physicians—tend to participate more.
Don’t let the profile of a company’s average employee steer you away from a solid corporate prospect. “Remember, employers don’t have to offer voluntary LTC insurance to their entire work force. Some companies that don’t look promising at first glance may actually have highly suitable departments or other groups of employees within it,” says Manning.
It’s also important to look for certain qualities in an employer. “You want to find employers who really understand how LTC insurance can address the risks employees face and who have a sincere, paternalistic interest in helping educate their employees,” says Manning.
If an employer seems primarily motivated to add the benefit for mere benchmarking purposes—to “check a box”—consider moving on to the next prospect.
Even employers who see the value of voluntary LTC insurance may be hesitant to implement such a program. Manning and I have both found this is usually due to one of two major concerns:
(1) Timing. An employer may simply have too much on his plate at the moment, particularly if he is about to initiate his company’s annual enrollment exercise.
(2) Administration. Even if employees are paying the premium, collecting those premiums creates an administrative burden.
Fortunately, each concern is easy to overcome. In fact, when it comes to timing, producers should be just as reluctant as employers to roll out a group LTC insurance program as part of the annual benefits enrollment process. Do it “off-cycle” and you’ll be much more likely to capture a share of employees’ attention—and their budget.
As for administrative concerns, we’ve found more and more companies are offering LTC insurance via direct bill, which largely liberates employers from ongoing responsibilities.
Persuading Employees
Once you get the “go-ahead” from an employer, it’s time to focus your attention on individual employees. On this front, success depends on taking the right approach.
“The key word is ‘education’,” says Manning. “Despite the substantial progress that’s been made so far, LTC is still a pretty poorly understood risk.” To persuade employees to address that risk, you have to start by teaching—not selling. That kind of approach won’t just yield more business, it will also endear you to the employer.
Whether you enlighten employees via individual consultations, group meetings or webinars, key concepts include:
• The connection between LTC and retirement planning. Position LTC insurance as an important backstop to employees 401(k) accounts—safeguarding their savings from the growing cost of care.
• The programs that don’t cover LTC. Too many Americans still think they can rely on Medicare, Medicaid and health insurance for substantial LTC benefits.
• The positive side of LTC insurance. Nobody likes to picture themselves in a nursing home. Educate employees about policy benefits that help them stay in their own homes longer.
• The benefits of buying through a group. Employees enjoy discounted group rates and simplified underwriting—while still enjoying portability if they move on to another company or retire.
•The HSA angle. If the employer offers Health Savings Accounts, they can be tapped for LTC insurance premiums.
A Partner Can Make the Difference
Americans’ awareness of the need for LTC planning continues to grow and, with it, the opportunity to achieve substantial success in the voluntary LTC insurance market. That said, brokers or producers who are new to this niche may face a steep learning curve when it comes to perfecting their pitch and helping clients navigate plan selection, underwriting and administration.
Manning concluded, “That’s why I chose to partner with a LTC brokerage. After a suitable employer prospect has been identified, these firms can take the lead on everything from the initial presentation to employee education, enrollment and ongoing service—leaving you free to focus on the broader relationship and finding the next opportunity.”
