Facts and figures may tell the real financial story behind the value of long term care insurance, but only accountants, actuaries and other number crunchers respond to the cold, logical appeal of a cost benefit analysis, say long term care experts.
BENEFITS BUSINESS
Agents need to educate prospects about the personal values of LTC
By Len Strazewski
Facts and figures may tell the real financial story behind the value of long term care insurance, but only accountants, actuaries and other number crunchers respond to the cold, logical appeal of a cost benefit analysis, say long term care experts.
Agents who expect to market long term care coverage to employers and their employees need a broader marketing approach that appeals to personal experience and emotional response as well as a fiscal needs analysis, says Wilma G. Anderson, RN, a long term care agent and educational consultant in Littleton, Colorado. And they need to focus less on medical issues and more on retirement planning to justify the cost of the coverage to employers, she says.
"It's a tough sell for both employee benefit managers and employees because it doesn't fit the pattern of other programs. Many employee benefit managers may not have heard much about long term care coverage because they tend to focus on health benefits and the constant struggle to manage costs," she explains. "They tend to look at long term care as another kind of health benefit that can only add to their costs--so they don't bother to examine its value."
To make the case, agents need another approach that differentiates the coverage from traditional health benefits. They need to make a personal contact with employee benefits managers or other purchasing executives and tap into their personal experience with the problems that create a need for long term care.
Anderson knows of what she speaks. Founder of Senior Care Associates, a specialty agency that represents John Hancock Life Insurance Co. and CNA LTC, among other insurers, Anderson has more than 25 years' experience working with physicians, hospitals, health maintenance organizations and financial planners.
Although she came to the long term care insurance field as a health care practitioner, she learned quickly that the health care values of long term care are not sufficient to attract buyers. She now works with agents, employers and groups of individuals, teaching how to communicate the personal value of long term care in other perspectives.
She bills herself as "The LTC Coach" and conducts long-distance coaching sessions with agents, employers and financial planners as well as in-person seminars (www.TheLTCcoach.com).
"Working with employers takes a long time--sometimes as much as a year--to make the case for long term care insurance. At first, they say they have no interest. But when I probe around a bit, I discover that many executives have faced the needs that long term care insurance fulfills. In many cases, they have had a personal experience with a family member," she says.
"Maybe they have had to arrange nursing home or assisted living for a senior parent or have had a dependent with a serious illness that required some institutionalization. However, they may have never put those experiences in the perspective of their own employee benefits and their decision-making.
"If you can draw out that experience, you can make them relate directly to the broad, human needs for long term care insurance. When they realize their needs, they want the coverage and they want their employees to have it," she says.
Anderson recommends that agents begin the education process by asking employers for a survey of employees by age to identify potential candidates for the coverage. "Early in the history of the coverage, seniors were the main market, but now the biggest market is Baby Boomers just beginning to examine their retirement future," she says. As Baby Boomer employees age and face an individual or dependent parent care crisis, the need for the coverage is becoming clear and urgent, says Anderson.
Ask to give a presentation to pre-retirees--employees age 50 or older--about long term care issues. Include the employee benefits manager or purchasing executive and ask whether or not he or she has had a relevant experience that he or she would like to share with employees. Other employees are likely to have had similar experiences--and concerns over the costs that those experiences make apparent, she says. In some areas, experiences may be very similar.
In Colorado, for example, multiple sclerosis occurrence rates are much higher than the national average, she says, and many individuals have friends or relatives stricken with the disease. They are likely to be very sensitive to the needs that the disease eventually creates.
"Allow them to realize that it is not a question of 'if,' but rather a question of 'when' they or their dependents may have similar needs," she says.
Anderson says that she also advises agents to approach long term care insurance not so much as a medical resource, but as a retirement protection issue. "Approach the long term care insurance from the retirement perspective--as a way of protecting the retirement nest egg from the high cost of long term care services," she says.
However, don't ignore the coverage details and the premium costs, says a producer who also specializes in long term care insurance. Employers tend to be confused about long term care insurance and overestimate the costs, says Kathleen Beggerow, president of Axis Benefits Consultants, Inc., an employee benefits brokerage in Hinsdale, Illinois.
"It's not as expensive as many employers believe--especially if their only experience with the coverage is individual policies. Rates vary by the age of participant, but group plans are cheaper than individual plans and employees rarely are subject to medical underwriting qualifications during open group enrollment," she says. "Once they realize the advantages, they respond."
Anderson and Beggerow agree that smaller employers are a better market for the coverage. Anderson says small employers are more in touch with employees and perceive them as extensions of their family--making their personal experience very relevant to their benefits decisions.
Beggerow says small businesses are simply more pragmatic. "Small businesses like the coverage because it meets a real, practical need. And it is a way of doing something special for employees without adding a lot of costs," she says.
Edward Lehman, an employee benefits consultant with Watson Wyatt Worldwide in Los Angeles, agrees. "Employers are always looking for new benefits that they can add that don't cost a lot more money but address a real, tangible need," he says.
Long term care is also a "convergence benefit," he says. The coverage supports a corporate wellness strategy and contributes to a comprehensive package of retirement financing benefits.
Regardless of the cost or premium payment plan, the benefit sends a positive message to employees, says Lehman. "Whether you promote it as a health benefit or a retirement benefit, it indicates to employees that you care about the whole person--not just the portion of your employee's working life," he says.
However, experienced agents warn that selling long term care insurance as an employee benefit remains more difficult than marketing coverage to individuals.
James Blanchard, president of Seniors Only Financial, an agency in Elk Grove Village, Illinois, restricts his practice to individuals. Blanchard represents Golden Rule Insurance Co., State Life Insurance Co., and GE Capital Assurance Co. These companies specialize in individual long term care coverage and whole life insurance that can offer a cash value applicable to long term care costs.
"The group market is very difficult. I prefer to work with individuals because I have more control over the education process and service," he explains. A disciple of Anderson, Blanchard says the personal approach is more effective on a one-to-one basis.
"Long term care is the single most neglected aspect of retirement planning. Without it, you only have half a retirement plan. But many seniors can't afford it and many who can, can't qualify. When I focus on an individual, I can be more effective at solving their individual problems," he says. *
The author
Len Strazewski has been covering employee benefits issues for more than 20 years and is employee benefits editor of Human Resource Executive magazine. He has an M.A. in Industrial Relations from Loyola University.