Did you catch the recent New York Times article, “Aged, Frail and Denied Care by Their Insurers?” The front-page story gave the impression that long-term care insurance companies have been denying claims left and right. While you, as an advisor, know that insurance companies have nothing to gain from denying claims, your prospects may not—making a tough sale even tougher. There are several key points to share with prospects so their expectations of the claims process actually coincide with practice.
The big picture
Let’s start with the big picture. Last year, LTCI companies paid some $3.3 billion in benefits to tens of thousands of qualified claimants—that’s the largest amount of money paid out to LTCI policyholders since the product was introduced over 20 years ago. Overall, the industry has an outstanding record of benefits paid. In fact, one of the companies cited in the Times article has actually paid out over $1.5 billion in policyholder claims since the company’s inception in 1972. Along the way, less than one-tenth of one percent of all the company’s claims has ever gone to litigation. The bottom line: When a claimant qualifies for benefits, LTCI insurers pay.
The operative word, of course, is “qualifies”—and that’s where the potential for confusion and erroneous media reports arises. What may seem like an incapacitating condition to one person may really not be a sufficiently qualifying condition. For example, someone requiring assistance with “instrumental activities of daily living,” such as housekeeping, can indeed appear very needy but is independent in his or her “activities of daily living,” and thus ineligible for LTCI benefits.
So, it’s crucial that you communicate need and risk to an LTCI prospect from the get-go. You might consider conveying the information through real-life examples of policyholders who qualify for benefits. (If you use your own clients as examples, be sure you’ve secured their written permission beforehand.) You can also get material from a third-party organization. Real-life examples are a strong, supplemental way of demonstrating the value of the purchase and provide an easy way for a prospect to relate to the information about the process, should a future claim arise.
After the sale, ongoing communication is essential and something that advisors who market LTCI will increasingly need to accept as an important responsibility. A two-page newsletter, mailed twice a year and printed on high-quality paper, is a great way of keeping your client in the LTCI loop. The newsletter’s content, culled from media and third-party organizations, may touch on topics like fiscal (and physical) fitness after 50, new developments in tax legislation and the latest statistics on cost of care. In the end, your client is more likely to understand the value of his purchase, add to his policy and refer other prospects to you.
You should also include your client’s children in ongoing communication. That’s because, at the time of a claim, it’s often the policyholder’s family who initiates inquiries. So why not connect with a client’s children well in advance, particularly if your new client is already in his seventies? A good time to reach out to the children is following the delivery of a policy. You can give your client a simply prepared letter, along with your business card, to pass along to his children. The letter may say, “Because we care about you and don’t want you to worry about our future, we’ve purchased this long-term care insurance policy. If you ever have questions, here’s the professional to call.” While not your primary goal, this is also a way to generate referrals.
With ample information that’s provided on an ongoing basis, the claimant—or, often a family member—will know what steps to take and what to expect if a claim situation arises. At the end of the day, an educated consumer is our industry’s best customer. And, that’s one claim no one can ever dispute.
Jesse Slome is the executive director and founder of the American Association for Long-Term Care Insurance, in Los Angeles. The professional organization does not lobby on behalf of the industry. Slome can be contacted at email@example.com.