7 agent FAQs on long-term care insurance

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Editor's Note: This is the second of a two-part installment on long-term care insurance FAQs. Be sure to check out yesterday's answers on underwriting and plan design here!

In the ever changing world of long-term care (LTC), advisors looking to educate clients on LTC solutions frequently have many questions about underwriting, plan design, rates, group plans and other topics, such as when is the optimal time for a client to buy LTC insurance, or whether seminars should be used for prospecting.

Tom Riekse Jr., managing principal of LTCI Partners, a brokerage general agency specializing in LTC insurance, shared insights with Insurance Business America on some of the most commonly asked questions by advisors when it comes to LTC solutions.  

Carrier Rate History
Q: How do I deal with potential future rate increases?
A: Most clients today are aware of rate hikes, so advisors should discuss this possibility with them right from the start. The good news is LTC policies today are better designed than they were 15 to 20 years ago, but that doesn’t mean you won’t have an increase over the 25 to 30 year life of a policy. The possibility that rates will go up is a consideration that should always be included when evaluating a client’s budget. The reality is that over the next 10 years a client might see a 10 to 20 percent increase and it might repeat every 10 years or so. Some carriers have told us they are now opting to assess smaller, periodic rate increases.

Q: How do I overcome client objections about rate increases?
A: When a client receives notice of a rate increase, take time to review their policy with them. This is a good opportunity to discuss how much benefit they currently have, and how much they think they will need in the future.  In our experience, most people accept rate increases without issue. However, we have also seen that carriers are now providing more options when a rate increase happens, like allowing a client to reduce their benefit period, inflation option or monthly benefit. Advisors should be aware of these options and explain them to their clients.

Q: How do you explain a suitability form?
A: It is a requirement by the Department of Insurance to ensure an advisor does not sell an unsuitable policy to a client. The form asks clients whether they can afford the coverage, if they really need the coverage and whether they understand what they are purchasing. Advisors should go through the form with clients. A client can elect to not fill out the form, but if they do, they will get a second letter from the carrier asking them if the policy is really what they want to purchase. Regulators often look at LTC as a product mainly for seniors and this is a way to protect seniors from an unethical agent.

Group Market
Q: Is there still a group market?
A: There are several carriers that still offer group plans. One carrier in particular has a group product suitable for groups of 500 eligible participants and up. There are some carriers that also offer multi-life programs with unisex rates, simplified underwriting, corporate discounts and ease of enrolments. There are many advantages to purchasing LTC at the workplace, whether it’s a corporate-funded benefit or voluntary.  

Miscellaneous
Q: When should I recommend linked benefits vs standalone LTC insurance?
A: A client has ways of letting you know which product makes the most sense to them. For example, if a client voices an objection to paying for something he thinks he may never use, try pointing him to a linked-benefit product. The key is to consider what is motivating each client. When clients talk about pure life insurance with chronic illness or accelerated death benefit riders, they are most likely interested in life insurance. If they want to discuss buying LTC with linked benefits, they are probably primarily interested in LTC. As with any selling situation, it is important to know what end goals are in mind.

Q: When is the optimal time to buy long-term care insurance?
A: The optimal time to buy LTC insurance is usually between the ages of 50 to 60. Underwriting is getting tighter these days and, unfortunately, most people see increasing health problems crop up in their 60s. With health a driving factor in carrier approval, it is a good idea to start encouraging clients to buy LTC before they need it.

Q: Should I use seminars or webinars/webcasts for prospecting?
A: Seminars still work for some advisors, but they are becoming less popular due to time constraints. As an alternative, webinars are a great way to educate clients and get visibility for your business, as people in their 50s can more easily adjust their schedules within a workday to attend a webinar. The important thing to remember when planning either one is that clients want to be educated, not sold.

 
  • Raymond Lavine on 8/29/2014 9:41:33 AM

    Valuable comments Tom

  • Derick Guyton on 9/2/2014 11:52:53 AM

    All very true, well said!

  • Nicole Young on 9/5/2014 10:02:42 PM

    This is beneficial since long-term care insurance is one of the most ignored product so agents are having a hard time convincing Americans to buy one. There are certainly lots of issues to be address including underwriting, pricing and risks.

    Nicole

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