If you’ve been in the business for more than a few years, you’ve no doubt heard the predictions about how long-term care insurance is inevitably bound to blast off. With the “age wave” of baby boomers reaching the point in their lives where the need for long-term care is staring them in the face, this ought to be one of the hottest markets there is. Some people — I’m one of them — even have predicted that long-term care insurance eventually would be the new “universal life,” injecting excitement, innovation and new sales into the business.
But the reality, so far at least, has not matched the predictions.
Just because the market hasn’t achieved the hyped heights that some people predicted, however, doesn’t mean that the market isn’t critically important and should not be part of your practice. In fact, there are lots of terrific producers around the United States who are doing a very effective job of helping a lot of people and selling a lot of long-term care insurance. We caught up with a group of them and posed some questions about the state of their business, and where they see it headed. Here you’ll find the ideas of the following top producers: Matthew D. Brotherton, CLTC; Arthea J.S. Reed, Ph.D., CLTC; and William M. Upson, ChFC, CLU.
1. Charles K. Hirsch, CLU: In these days of so much economic uncertainty, do you find it a relatively good time or a relatively bad time to be working in the long-term care insurance market, and why?
Matthew D. Brotherton, CLTC: This is a great time to be involved in the long-term care insurance marketplace. People who previously thought they could self-insure now think about LTC. Financial advisors, attorneys and accountants realize their clients’ assets are not as high as they used to be and now would benefit from protection with an LTC insurance policy. Also, brokers and those who did not work in the LTC insurance market are looking for ways to generate extra revenue. I have been receiving calls from other producers who want to work cases together.
Arthea J.S. Reed, Ph.D., CLTC: I see it as both good and bad. It is a difficult time for some people to consider adding any new expenses to their budgets, but at the same time others who thought they could self-insure are reconsidering whether that is now possible given the decrease in the assets they have available for retirement. These are the people we need to be talking to about long-term care insurance.
William M. Upson, ChFC, CLU: I find it a very exciting time to be creating solutions and working with complex cases, as well as handling the day-to-day requests for long-term care, as clients and prospects realize it is no longer all about the relatives they wish to help but about themselves and their immediate needs. I have seen a major change in attitude toward our products and services as the economic uncertainty of the past 18 months has unfolded. We have sold many policies in this time period because we listened to our clients’ comments about their fears and insecurities about their futures. We have seen some people who had put off a decision on this subject for no good reason, now realize they must be prepared to care for themselves with so much uncertainty in the future. We have added more than 250 new policies during this timeframe, and I believe it is just the beginning of what will be very significant growth for us in the next five to 10 years in this market.
2. Hirsch: What are the major issues that are affecting your long-term care insurance business in a positive way at the present time?
Reed: My market always has been highly affluent clients. The downturn in the financial markets has made long-term care insurance an easier conversation. People who were not willing to discuss long-term care insurance before are willing to do so today. Even people who can self-fund their care are reconsidering whether self-funding is their best option. Do they really want their children making decisions about whether or not to spend their inheritance on the parents’ care?
Upson: The baby boomer generation has reached the age where they require these kinds of products and services, and they have the money to pay for what they want. We also have a very large percentage of the United States population dealing with many issues related to disability for themselves, family members, and also extended family. We have been actively working with attorneys and accounting firms to get out the message that financial planning in this area is critical owing to the rules and regulations affecting those with these needs, and mandate that they structure “special needs trusts” where needed so that benefits for those disabled and on government benefits do not lose their coverage.
We also are working with several charities in our area to help them in their fundraising efforts since we can provide the kinds of products that many of their beneficiaries need, if structured correctly. In an effort to create meaningful solutions for those with illnesses and injuries that LTC products normally exclude, I wrote a book, Long Term Care, Alternatives and Solutions, which has led to many requests for me to speak on the subject. These speaking engagements have led to many sales to people in wheelchairs, suffering from Alzheimer’s, Parkinson’s, cancer, heart disease, etc.
Brotherton: Over the past few years, I have found that focusing on a target market has helped me gain recognition in that market, which, in turn, has helped me promote my company and me. I have successfully marketed myself to individuals and companies and they have started to view me as the expert in LTC, life and disability insurance products. I have also found that working with companies and doing worksite marketing has helped me sell multiple policies inside one client company. Finally, it’s helped to be an expert in a few products (LTCI, life and disability income) and join forces with other professionals who specialize in other areas. We work as a team to help serve the client and solve their needs.
3. Hirsch: What are the major issues that are negatively affecting your long-term care insurance business at the present time?
Upson: I find there are very few concerns that are legitimate at this time. I am finding the negative issues are the ones we are successfully turning into sales that other brokers and agents have not been able to successfully solve or find an alternative for.
Brotherton: I don’t see any issues negatively affecting my business. All negative issues can be turned into positives with a little imagination and creative thinking. For example, instead of seeing other advisors or brokers as competition, I see them as a potential source of clients and revenue. Most advisors do not know how to successfully market LTC insurance to their business clients. With my team’s experience, we can implement LTC insurance and help add another product to the other advisor’s mix of products.
Reed: The only issues reside within me. I have to overcome the fear that people are unwilling to take on new expenditures.
4. Hirsch: For many years, people have predicted that long-term care insurance sales would skyrocket, owing to the wave of baby boomers who are aging. Yet, to date, that huge increase of sales really hasn’t happened. In your view, why hasn’t it happened, and what needs to change in order for those sales to start materializing?
Brotherton: Consumers and most financial professionals do not have the proper education when it comes to LTC issues. It seems like LTC gets buried in magazines, newspapers and other financial journals that consumers read. Producers are afraid of bringing another professional who knows LTC insurance to meet with their client, so instead they bypass the subject. I feel that in the next several years, LTC insurance will become more prominent as more consumers will have personal experiences. They’ll realize the government is not able to protect them, and they’ll need another source for protecting their assets.
Reed: I think there are many reasons:
1. The product was misnamed. No one wants to think about going to a nursing home and most people think of LTCI as nursing home coverage when actually the opposite is true.
2. The perfect storm caused by unrealistic pricing, increased premiums and companies exiting the market have made prospects very cautious.
3. There has been a lack of education about what care costs and what government programs will and will not pay for. The national health care debate has added to the confusion.
4. Companies and producers have marketed largely to middle-class prospects. Although this is an important market segment, marketing almost totally to the middle class ignores the fact that the affluent and very affluent can benefit from the product as much as the middle class can.
5. Because the product has been marketed to the middle class, most financial advisors have advised their wealthy clients against purchasing it. Not only have they promoted the concept of self-funding, they have not seen that it is to their advantage to sell it. Unfortunately, policies sold to the middle class do not always offer enough of a commission incentive for high-producing agents and financial advisors to sell LTCI.
6. Many of today’s product designs have eliminated those features that are most important to an affluent client, such as the lifetime benefit period.
Upson: The first major issue is lack of proper training of agents and brokers, so that they fully understand the issues, solutions and their own personal liability for not dealing with these issues with clients. The producer’s attitude of “I don’t offer it because I don’t understand it” no longer works when those same individuals are being confronted by the attorneys of those clients and their children, indicating this was not properly handled to protect the family estate.
I believe the other major issue is the lack of support by most government agencies, as well as the limited promotion by insurance companies in this regard. There is very little being done to promote and recommend these products. Instead, that work is being left to the insurance companies. I personally sell 10 times the amount of LTC products compared to life insurance on an annual basis, but the companies keep pushing me to sell more life insurance, as if the people with LTC needs are going to care about or want life insurance premiums they cannot pay in the last years of their lives.
5. Hirsch: What’s the best practical idea you’ve instituted recently that has had a positive influence on your business?
Reed: I have spent more time working with clients in the area of retirement planning, and have incorporated graphs that show what even a three-year care need in a person’s 70s or 80s will do to an otherwise very adequate retirement plan.
Upson: As I mentioned earlier, I’m working with local charities to help their respective audiences in finding coverage for their constituents in need. I believe it has opened and will continue to open many new sales and opportunities for us in the years ahead, as we find solutions to those in need now, as well as those with illnesses and health issues that will guarantee the need for LTC products.
Brotherton: The best practical idea I recently have implemented has been adding a junior agent to my team. After speaking with my business coach, I realized I needed help in conducting enrollments at companies. By adding support to my team, I am able to “multiply” myself, to still meet with the employees who are interested in meeting, and to open up other protection sales from those employees. It also helps me focus on getting new employer clients while maintaining the relationship with the business owner or human resources director.
6. Hirsch: If you were advising a producer who was considering a move into the long-term care insurance area, what would you tell him or her about the steps he or she would need to take? And as you look at your own transition into this market, knowing what you know now, what would you have done differently?
Upson: I would tell any producer to get fully educated on the issues, get properly licensed, work with other experienced brokers in his or her area who are knowledgeable, and constantly sell LTC products so that producer is up to speed on these subjects. I do not believe I would have done much differently regarding this issue since I have been selling long-term care to clients since 1990, and it has been a springboard for my successful business and a constant source of expanding relationships. I probably would have spent even more time working in this specific market, but it does represent about 50% of my efforts now and has always been about that same percentage.
I do hope more agents will become acquainted with the wonderful products and services that are available to us, and go out and help more of the public protect themselves from a looming disaster. It is not right that the United States public does not have more of us producers protecting them from all the things they do not understand and will not experience until it is too late to fix the problem or problems.
Brotherton: I would advise a new agent to move slowly into the marketplace. You need to maintain the current business mix you have but work extra hours during the week. If I could start over, I would have done more joint work in the beginning of my career. Working with others speeds up the transition period and also shows the prospect company that you have a team to work with their employees.
Reed: I would advise new financial representatives to take a broader planning approach and make LTCI one very important element of all plans. Although I have specialized in LTCI and have had a very good career, I do not think that most people can make an adequate living simply selling LTCI. If someone wants to specialize only in LTCI, I think they must work with more affluent clients, work largely in the group/multi-life marketplace, or both.
Arthea S. Reed, Ph.D., CLTC, is a 9-year MDRT member with two Court of the Table and one Top of the Table honors. She is a financial representative and long-term care insurance specialist with The Asheville Group of Northwestern Mutual Financial Network in Asheville, N.C.
Matthew D. Brotherton, CLTC, is president of 1752 Financial Solutions, LLC, in Richmond, Va. He attended Roanoke College and graduated in 2000 with a degree in business administration. After graduation, he began his career specializing in long-term care insurance and is now specializing in life insurance and disability insurance as well. Throughout his career, Matt has been recognized for his accomplishments, including being a member of the Million Dollar Round Table and Court of the Table, being ranked in the top 10 by the American Association for Long-Term Care Insurance since 2007, and being nationally ranked in the top 10 by John Hancock for long-term care insurance sales (leading the country from 2007 to the present).
William M. Upson, ChFC, CLU, is a 15-year MDRT member with two Court of the Table and 11 Top of the Table honors. His company, Strategic Asset Management Group, is based in Walnut Creek, Calif.