Speaking the words “free insurance” requires the proverbial bar of soap and a firm and energetic scrubbing of tongue and tonsils. There is always a cost: bigger, smaller, current or deferred. Our curse as insurance professionals has never been the reality of the cost of leveraging risk but the perception of cost that prevents access to sales. Although this principle may apply to all insurance sales it is particularly true of LTC insurance sales.
In a recent survey conducted by Matthew Greenwald and Associates, Inc., and John Hancock—“2009 Small Business Survey of Long Term Care”—the perception of the cost of adding LTC insurance was the “leading deterrent” for not offering coverage according to 66 percent of those surveyed. Adding LTC insurance as a company benefit always costs something regardless of the level of employer contribution. One of the primary impediments to all LTC insurance sales has been the popular myth that the price is too high and therefore a lack of understanding of the value proposition of owning a policy.
In spite of our best efforts to explain the real cost of owning a policy, it must be compared to the cost of not owning a policy.
Every decision to protect employees and their families involves some level of employer largesse—administration time, enrollment interruptions, employer-provided dollars as incentives to buy, or full benefit purchases. Decisions about LTC insurance at the worksite reside in what the french called “noblesse oblige” which Webster’s defines as “the obligation of honorable, generous and responsible behavior associated with high rank.”
The most attractive feature to employers who participated in the survey was the ability to deduct employer-paid premiums (70 percent). It was also considered important to be able to provide caregiving advice and expertise, not have to count employer contributions as employee income, and guarantee policy portability. The survey also confirmed my experience in the field which strongly suggests that worksite sales bubble up at work, meaning that two thirds of surveyed employers recognized that the demand for protection came from employees.
Now, let me ask a rhetorical question: Just how big of an opportunity is required to get your attention?
According to the Small Business Administration there are 5.9 million employers in the small business market. The survey suggests that among the smallest companies almost two-thirds of employers with 10 to 19 employees had never been approached to buy! Even though the survey suggests that employers are more likely to turn to their benefit broker for LTC insurance, we know the truth—these sales are not easy and require more hands-on contact with employees than is necessary with other traditional worksite benefits.
There are tens of thousands of employers just waiting for you to ask. This is a classic opportunity to offer what you do best: individual counsel, advice and customized protection. One size does not fit all with LTC insurance.
Employers are aware and recognize the problem. Almost two-thirds of employers surveyed knew that their employees understood they may not be able to afford long term care for themselves and their family members. We know the truth about the risk—it is unavoidable.
Employers are also acknowledging the obvious with 26 percent reporting that LTC insurance issues were impacting their companies’ productivity in a negative manner. Employers are aware of the problem. However, they are not aware of the solution. Fewer than half of those surveyed were “knowledgeable about LTC insurance.” Fewer than half understood portability, carve out, and no tax to employees when benefits are provided. It is interesting that about half understood the premiums were deductible to the corporation.
I consider myself a scarred veteran of multi-life sales. The one concept I cannot subscribe to is ease of enrollment. Enrollments are often painful from an administrative standpoint. The survey clearly identified the need for “ease of implementation” as “one of the most important issues.” If there are any company folk reading this column, may I humbly suggest we all have a lot of work to do to accomplish that goal.
Employers know there is a financial problem that directly impacts them. They know that LTC insurance coverage is special and unique as an employee benefit because of the inherent tax advantages. They are aware of employee interest in LTC insurance protection. It appears that a great many of them are simply waiting on you for help.
Your mission is to help them understand that to engage in an effort to alleviate exposed need, they must lead by example! This is about caring, it is about financial self interest, it is about generosity, it’s about helping others help themselves. It mandates the necessity of largesse.
Other than that, I have no opinion on the subject!