Over the years, I have approached the long term care insurance sale from more directions than most. These columns have continued to chronicle the historical evolution of our crusade to protect more Americans from the looming eventuality of an asset-sucking black hole. I have appealed to conscience, intellect, responsibility and reason.
Maybe I missed the barn! The often unspoken truth is that the great and vast majority of agents and general agents have simply chosen not to help. I don’t care how you measure the results, less than 10 percent of consumers have bought; but much more significantly, less than 10 percent of agents have made any real attempt to make the sale.
Let’s look at the numbers. There was approximately $500 million of new premium last year. Let’s optimistically estimate three applications per agent at the current average of $2,000 premium each. Even if you were to factor in group sales, we are still looking at no more than approximately 80,000 to 100,000 agents involved in trying to write an application. Recently I purchased a list of all the licensed agents in America, and it was more than one million names. Granted the list contains property and casualty agents as well as restricted captives, but what is clear is that only about 10 percent of the available agent pool is involved in upholding their end of their professional pact—to protect their customers.
My own rough estimates also suggest that fewer than 50,000 agents have had any kind of professional designation training and fewer than 10,000 belong to a professional LTC insurance organization. I doubt if there has ever been an LTC insurance conference that drew more than 1,000 producing agents, and I am afraid to even speculate on how many may have recently completed the 8 hours of NAIC/Partnership training that is required.
We continue to lament the excuses, rationalizations and denials utilized by procrastinating consumers. We continue to puzzle over the lack of clear thinking, acceptance of certain risk, and necessary forethought to do the right thing. Yet, if I’ve done my math right, 90 percent of the insurance professionals in America need to stand in front of a full-length mirror and ask themselves the same questions.
Now let’s see if I can paint a giant bull’s-eye on the side of the barn. There has never been a greater opportunity to help American consumers and earn a living in the process.
Begin with the obvious: There is no health product with greater persistency. There are no renewals more reliable. Read my lips: You can and will make more money selling LTC insurance.
Now let’s compound the obvious. Multi-life and group sales have risen steadily as a percentage of the business over the last five years. My own experience suggests that average premiums are in the $20,000 to $30,000 range, which also include exceptional renewals and growing re-enrollments from sales already in place. While I believe that to succeed in the multi-life market requires assistance from an LTC insurance brokerage specialist, the product is in demand at the worksite and provides a fantastic method to solve underwriting obstacles. The bottom line is that multi-life sales generate very significant and ongoing sources of commission income.
In my humble opinion, the Pension Protection Act will generate the largest commission bonanza in brokerage history. The new combo products arriving in the marketplace are, for the most part, asset-based, meaning on average six figures of initial deposit with substantial first year relocation compensation four to five times greater than an individual LTC insurance standalone sale. My suspicions are that most of this premium will be relocated from existing sales with a 1035 exchange. So let’s summarize: It looks like big new commissions will come, for the most part, from existing sales with no new premium commitments necessary.
Agents avoiding the long term care risk conversation do so at their own peril, both professionally and financially. In my own mind, suitability provisions in the NAIC Model Regulation guidelines clearly describe the necessity of explaining all LTC insurance risk leveraging options. In addition, the Pension Protection Act opens a new and expansive universe of sales opportunities.
All the excuses for not helping are going to evaporate. Enormous LTCI commissions will finally put fuel in the tanks so that we can move forward. The first time an agent sits out of the struggle and loses an enormous commission, or learns how to make an enormous commission, the LTC insurance sales conundrum will finally come to an end!