(Continued)

The new employee benefit
That attitude shift has helped turn LTCI into the new employee benefit. Employers are now adding LTCI—available to workers and their families—to their benefits packages.

Bertsch notes that as rising medical costs cause employers to shift more of the burden for health care to the employee, many company owners are trying to boost morale by subsidizing LTCI expenses. It’s a win-win: Employees opt-in through payroll deduction, and employers write off premium payments as a tax deduction.

“The net cost to the employer is still less [than paying health insurance premiums],” Bertsch explains. “But employees feel like they’ve gotten something in return, and the employer has also offered a great benefit.”

To tap into the LTCI benefit market, advisors should know everything they need to know to talk to people over their kitchen tables and they should be able to talk to employers about how long-term care issues affect worker attendance and productivity. For example, companies lose an estimated $29 billion a year in employee productivity due to workers’ problems with long-term care, according to LifeCare, a human resources management advisory firm based in Shelton, Conn.

Increasingly, employers are adding LTCI—available to workers and their families—to their benefits packages.

Clear up the confusion
But insurance advisor and elder-care specialist Bob O’Toole reminds advisors that just because “we understand both the value of LTCI and the consequences to those who don’t have it, we can’t assume that members of a sponsored group will get that message.”

That’s because LTCI remains a very confusing product to the consumer, O’Toole says. With benefits ranging from home and respite care to residential living and hospice care, “the crazy mix of services is complicated for clients to figure out. Even if you’re in the field, it’s complicated.” O’Toole, a founding member of the National Association of Professional Geriatric Care Managers, became a licensed insurance agent and LTCI specialist for precisely that reason.

A 2000 survey of insurance buyers and nonbuyers conducted by Life Plans, Inc. for HIAA, highlighted consumer perceptions of LTCI. Among nonbuyers:

• Twenty-five percent believe Medicare will pay for their long-term care; twenty-two percent believe Medicaid will pay.
• Twenty percent don’t know who pays for long-term care.
  
• Thirty-four percent said they don’t think they will ever need services.
  
• Fifty-eight percent said they were waiting for “better policies.”

Such misconceptions double the burden on advisors. First, they have to help client-employers get the word out on new LTCI benefits. Second, they have to educate employees. Though he hates to use the worn phrase, O’Toole urges advisors to “think outside the box” when attacking the problem—to reach higher than direct mail, worksite posters and splashy “launch” seminars.

“There must be a commitment from the plan sponsor to allow the broker or the insurer ongoing access to the employees/members,” O’Toole says.

Lack of awareness isn’t the only hurdle advisors face with group LTCI plans. Innovative Solutions’ Thornburgh points out another challenge: “A lot of our producers will go out and quote a large employer or association. But it’s very competitive with lots of brokers involved. It’s also very time-consuming. I’d rather go out and see six small companies, and do executive carve-out plans, than go out and do one very large group case.”

Unlike large group plans that benefit rank-and-file workers, executive carve-out programs benefit only the business owner, his or her spouse, and a handful of highly compensated employees. Thornburgh notes that it is easier to put such plans in place than to implement large group plans. Employers love them for at least three reasons:

• They provide perks for key workers.
  
• Employers can maximize tax benefits by selecting accelerated payoff options.
  
• The business owner and spouse can retire with fully paid LTCI coverage using corporate dollars.

Get smart
Whether selling LTCI plans in the boardroom or across the kitchen table, LTCI specialist Honey Leveen suggests that a less experienced advisor work with a more seasoned advisor, and perhaps acquire specialized certifications in long-term care available through LUTC.

Lynn Vincent is a frequent contributor to Advisor Today.

LTCI SALES TIPS

By Lynn Vincent Are you new at offering long-term care insurance, or thinking of adding it to your product lines? Three LTCI specialists offer tips on selling—and serving clients—well. Get out in the trenches. Thirteen-year LTCI veteran advisor Honey Leveen, LUTCF, CLTC, suggests advisors visit as many assisted living facilities as possible, and invest time learning about different care options and prices. “My experience is that the public is hungry for knowledge about where care is being given today and what their options will be.” Leveen says. “There’s general confusion about the kind of care Medicare pays for and whether Medicare coverage duplicates LTCI coverage. You need to be adept at describing the differences between nursing homes, adult day care, personal care homes, assisted living, hospice and independent living arrangements. An LTCI policy is often essentially a passport to access assisted living, which many potential clients and even advisors may still be unaware of.” Don’t sell “nursing home insurance.” Jim Thornburgh, J.D., LLM, vice president of advanced sales at Innovative Solutions Insurance Services in Los Angeles, has this advice: “Don’t say to a client, ‘Here’s some insurance in case you need to go to a nursing home.’” Instead, he says, present LTCI products in terms of levels of care, which typically begin at home—the place where most people want to stay. Thornburgh suggests first showing clients how the policy covers the cost of having someone come in to do homemaking chores, therapy or food preparation. Then progress from there, saying, “At some point, you may need round-the-clock help, and it may become cost-prohibitive to have someone come to your home. Even though it’s not what you want now, you may need to move someday to some type of residential facility.” “Present it as a progression,” says Thornburgh. “’Buy this for when you need care at home, then if you need residential care someday, you’ll have it.’” Help clients afford coverage. LTCI can be pricey. And since Congress failed again to make long-term care an above-the-line tax deduction, consumers are becoming more aware of the expense. But if LTCI is right for a client, a good advisor can help that client find a way to buy it. “Prioritizing goals, giving a snapshot of a client’s current objectives and financial condition, and recommending viable solutions is what I do every day,” says Julie A. DeLiso, CFP, of MetLife Financial Services. After she presented a seminar on long-term care, one couple expressed strong concern—and a desire to buy LTCI. But at first glance, it appeared the husband, 67, and the wife, 50-something, couldn’t afford the premium. Still, they were extremely motivated to buy, and wanted a solution. So DeLiso began the financial planning process and learned that the couple held a large mortgage with a balloon payment. After a comprehensive analysis of assets, she recommended that they refinance their home. The couple obtained a new mortgage, without the balloon payment, and freed up $700 a month—enough to cover the LTCI they needed. Educate yourself about LTCI. Before you incorporate LTCI sales into your practice, advises Leveen, get educated. She notes that LUTC now offers a course in LTCI. Certifications include Certified in Long Term Care (CLTC), Long Term Care Planner (LTCP) and Certified Senior Advisor (CSA). NAIFA’s conference, the Association of Health Insurance Advisors (AHIA), offers its members a discount on these certifications. (For more information, call 703-770-8200.) In addition, the LTCP two-day classroom review course and exam will be offered as a preconference event at the NAIFA Convention and Career Conference this September in Kansas City, Mo. (Sept. 11-12 for the review, and Sept. 13 for the exam). To register for the LTCP designation program and review course, you can go to www.naifa.org/convention 2003/registration or call AHIA at 703-770-8200. Have a good time. And while you’re at it, Leveen says, “Have a good time. There are two annual national LTCI conferences [American Association for Long-Term Care Insurance (www.aaltci.org) and the National LTC Insurance Forum (www.ltcforum.com)] that are geared to producers, and they’re both worthwhile and fun.” Another conference to consider is hosted by the Long Term Care Insurance Educational Foundation (www.ltcedfoundation.org). It provides a nonpartisan forum for educating attendees about the evolving LTCI market, discussing the impact of state and federal legislative policies on the marketplace, and fostering the development of public-private partnerships to finance the nation’s long-term care bill.

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