Let’s be real. There is huge potential for those who are willing to work the long term care business, especially with multi-life LTCI. I’ve seen many agents leave money on the table and expose their book to competition as they never discuss LTCI with their clients. From speaking with them I’ve concluded that either they don’t know about the opportunity that lays before them or there are perceptions limiting their potential—and overcoming perceptions to see reality can be daunting.
Before discussing the opportunity, we need to address brokers’ limitations. First off, this is not right for everyone. As an agent, if you don’t believe in the value of LTCI or can’t see how an LTCI policy would help protect a worker’s family, retirement and 401(k), then this isn’t for you. If this describes you, do yourself a favor and find an agent that does see the value in LTCI. Fifty-five percent of Americans are concerned about how to pay for long term care costs,1 therefore it’s a need that should be addressed. Otherwise you run the risk of endangering your book to competition.
I’ve heard many limiting perceptions including “LTCI being hard to sell, rate increases, hard to qualify for, and that the ‘market is saturated.’” In regards to LTCI being hard to sell, all you need is to find the right buyer and maybe some basic training from a solid BGA. As far as the other limiting perceptions go, The potential for rate increases on LTCI products sold today is wildly low as we learned from the Society of Actuaries in their study Long-Term Care Insurance: The Pricing Project 2016, and the potential for group market rate increases is even lower. Multi-life LTCI also dispels the objection of being hard to qualify for with its simplified underwriting; you can expect to see a 94 percent approval rate. Even spouses can qualify for simplified underwriting! I can’t say enough about it. For example, this past fall a man already scheduled to have knee surgery qualified in three days—all due to the simplified underwriting.
Lastly, but more important, is this belief that the market is saturated. This couldn’t be further from the truth. Yes, the LTCI market has slowed down over the years and sales are starting to level off. If you combine hybrid and traditional LTCI sales, however, the group market is heating up. This is the perfect time to enter the group/multi-life side of the LTCI market. More agents are entering the market as they start to learn about the simplicity and beauty of multi-life LTCI, and there is plenty of room for you. A great way to describe it is that it’s like buying Apple, Inc., stock when they first purchased the mouse from Xerox.
Currently there are just not enough agents talking about LTCI to their clients. Genworth does a study every year from policies sold and the results show that only 17 percent of the policies are sold from when the agent approached the client. A very successful group/multi-life LTCI agent that we work with once said, as he smiled, “Selling multi-life LTCI is my best kept secret. It’s like swimming in the blue ocean, very little competition and generally the client is very receptive to discussing it with you. Now the life, DI, and health side of the group market is like swimming in the red ocean—fighting over business where it can be won and lost over saving five dollars.” Looking at the numbers you can see why an agent would feel this way.
Overall penetration into the market for groups above 5000 employees is between 31 percent and 39 percent. This is a good indicator of employers buying-in to adding LTCI as an employee benefit. Groups between 500—5000 have an eight to nine percent penetration in the market, leaving lots of room for growth in this area.
The largest potential lies with groups with less than 500 employees. Less than one percent of these businesses have an LTCI plan in place for their employees.
Navigating the multi-life LTCI world can be simple once you learn it, as there are only two carriers playing in this field—however you still need to know the rules.
The companies vary slightly, but in general here are the things to consider:
- An LTCI benefit can be offered to only those the employer wishes to receive this benefit and the number of employees offered this benefit determines what rules they must work with.
- Multi-life can go down to as few as three employees. For the groups with three to nine employees the benefit must be 100 percent employer paid with all plans being the same plan design. Ideal companies for this are either closely held family businesses or partnership type businesses such as law firms and medical practices.
- For employer groups with 10 to 74 employees the rules loosen up greatly, allowing executive carve-outs, employer minimum contribution, and an employee contribution. Groups this size still require an employer contribution to qualify for simplified underwriting, however with the flexible plan design employers can choose a plan that works to achieve their goals and objectives for coverage and cost.
- Groups 75+ have the best of all worlds as they can enjoy simplified underwriting with or without an employer contribution, have carve-outs to meet employer needs, and even offer the LTCI benefit to extended family.
Employers, C-suite executives, and HR/EB managers are looking for this solution. A study done by Wells Fargo on employee benefit trends, published in December 2016, shows that of the top three goals of employers in regards to benefits, they are concerned with maintaining productivity of employees and attracting high quality new talent. Both goals can be addressed by adding an LTCI benefit to their employee plan. Ask yourself three questions:
- What companies do I know that have three or more employees?
- Of those, which are financially stable?
- And lastly, which ones can I get to the decision maker directly or indirectly?
This is your list and starting point to get into the multi-life LTCI market. So why else should you consider adding this to your agency’s portfolio?
One of the benefits to offering multi-life LTCI is great public awareness. Above that, you would be adding a product line that has very minimal maintenance and virtually no service work! LTCI is not something that gets replaced! Unlike your life, health, and DI plans. Once you sell a plan to an employer you collect the first-year income plus all the renewals for years to come. The only “service work” needed is to enroll new employees. The income from multi-life LTCI sales is also quite good. Adding $100,000 to your bottom line is as simple as selling four cases with 25 employees each. For smaller agencies or individual agents, you can do this by adding it to your annual reviews. For larger agencies, it would be worthwhile dedicating an agent to this pursuit.
If you’re interested, make a list of your potential prospects and reach out to a MGA specializing in multi-life LTCI. Being paired with the proper support can be the difference between success and failure. A good MGA can help guide you with not only what to do but also what not to do that will help you achieve success and avoid stress, frustration and wasted time. Success is there for the taking!
Pulling from the Genworth study discussed earlier:
Q: Why do companies provide an LTCI benefit to their employees?
A: Because you talk to them about it!
Footnote:
1. LIMRA and Life Happens. 2015 Insurance Barometer Study and Associated Press-NORC Center for Public Affairs Research. Long-Term Care in America: Americans’ Outlook and Planning for Future Care. 2015.
