Mutual of Omaha Research Clarifies Who Are Long Term Care Insurance Buyers and What Motivates Them
If you offer long term care insurance, you may think you know who to approach, but, according to Steve Pike, sales manager at Mutual of Omaha, “Research findings recently released by Mutual of Omaha may give you a better picture of the typical buyer and what makes them tick.”
Recently, Mutual of Omaha initiated research to get into the “hearts and minds” of long term care insurance buyers with the goal of helping producers develop a better picture of who are typical buyers, why they buy (and don’t buy) and what steps they take to educate themselves before making a buying decision. And, because we all know that the personal nature of long term care evokes strong emotions, the research also delved into how consumers feel about long term care insurance, how much they understand about the risks they face, and how they prefer to buy.
The Mind. For the first phase of the research, Mutual of Omaha commissioned the MSR Group to conduct a telephone survey with its policyholders as well as those who own policies from other companies. The intent was to get into the minds of actual LTC insurance policyholders to learn more about who they are.
According to Pike, “From that research, we were able to develop the following profile of the typical long term care insurance buyer: female, Caucasian, age 55-64, married with children. College educated and working in a white collar profession (not yet retired), affluent, upper-middle class with a household income of $100,00 or more. A ‘planner’ who is interested in financial issues and owns life insurance as well as other conservative investment products. Knows someone (a family member or friend) who needed LTC services, and is a research-oriented Internet user who is self-educated about LTC insurance.
“This information reveals a shift in the minds of buyers. Retirement is clearly a life event that is driving people to buy long term care insurance. Agents and advisors should understand this profile so that they can devote more time to people who are predisposed to purchase long term care insurance.”
The findings also illuminate another big issue the industry is facing—the need to address the prevailing paradigms of policy design. Pike believes that, “If we are going to grow the market, we must rethink policy recommendations for people who do not meet the current buyer demographics.”
Reasons for Purchasing LTCI. Pike shared the top reasons for purchasing long term care insurance as indicated by the individuals surveyed: protect assets—23.6 percent, security/peace of mind—18.1 percent, cover the cost of LTC services in the future—17.4 percent, don’t want to be a financial burden to family—17.4 percent, and know I’ll need it—16.4 percent.
He added, “The survey also uncovered two important life events that serve as a trigger for individuals purchasing their policies when they did. Retirement was a key event—52 percent were getting ready to retire and 36.2 percent had either recently retired themselves or had a spouse who retired. The second key event was first-hand experience—34.7 percent said they knew someone who had experienced a long term care situation.
“These statistics can help producers in a couple of ways. First, if you are cross-selling existing clients, you can easily convert the information above into questions that can be used during meetings with clients. Second, when asking for referrals, ask for the names of individuals who may fit these scenarios or be concerned with the issues mentioned. Either way, this can direct you to those who fit the profile of someone with a common need for long term care insurance.”
Making the First Move. Pike said, “Typical long term care insurance buyers aren’t likely to have their first discussion about long term care insurance with an agent.
“According to 70 percent of those surveyed, the first step in the buying process is often a discussion among family members and friends. From there, they tend to educate themselves about long term care insurance by reading brochures, newspapers, magazines and the Internet. Many of those surveyed also turned to an agent, broker or financial advisor for information. However, 55 percent indicated that they made the first contact.
“With this information, producers can deduce that the majority of their clients are self-directed learners. So they may be thinking about long term care and how to plan for it, but they may not be asking you.”
Pike’s suggestion was to “make your clients aware that you are familiar with the long term care issues—and provide long term care insurance and/or work with a specialist who does. Emphasize this by updating your website and offering company brochures, newsletters and fact-finders. In addition, be aware of the sources your clients access for information.”
Pike also stated, “If I were a producer, I would open a conversation about long term care insurance by citing this research and asking my clients if they’ve had these types of discussions with family members. The results could be of benefit in a couple of ways. First, you may realize a client is actively researching long term care insurance. Secondly, you could identify a family member or friend who is doing so and who may benefit from your services.”
To read about the second phase of Mutual of Omaha’s research, go to www.tiny.cc/haeyfw.
