Once you know the person you want to target, you can begin the process of selling long-term-care insurance to increase your sales and revenue streams.
Michael J. McNeil, CLU, ChFC, a 32-year MDRT member with Northwestern Mutual, who spoke at the 2010 MDRT Annual Meeting, offered the following tips to successfully sell LTCI:
Speak in general terms. When initially discussing LTCI with prospects, it’s more effective to talk about the product’s value than about the different designs and policy features. Let the prospect fully appreciate the risk to his family and accumulated assets before you bring out the policy features and limits. Remember that your job is to assist your clients and prospects in designing an LTCI plan, not just a policy.
It’s a plan. McNeil said that he makes sure he has an understanding of the prospect’s financial situation. He begins the LTCI conversation by saying: “Mr. Prospect, let me tell you what your plan is. It involves either your spouse or one of your grown children spending your money or theirs to take care of you. You’re too young for Medicare, and you’re probably never going to collect from Medicaid because you simply have too many assets.” This is a key point in making people understand that LTCI is not about a policy, it’s about a plan.
Dig deep. Ask about the prospect’s family, including his parents, age, general health and financial situation. Inquire about his siblings, their ages, where they live, and most importantly, find out about the relationship between the parents and the children. Ask about the spouse’s side of the family as well. You want to know if there is anyone in the family currently receiving LTC. If not, ask, “If one of your parents needed either physical or financial assistance, which of the children would step up and help them?” By asking these questions, you are also increasing your opportunities to be referred to these prospects, to the prospects’ parents and/or siblings.
Own it. It’s difficult to sell something you don’t own. McNeil said that a sales rep in his office wanted his help with a dynamic and successful female business owner in her mid-50s. McNeil and his colleague went on the call together and met at the woman’s house, when McNeil began explaining the various plan designs and contract features in the LTCI product.
After McNeil concluded his presentation, she looked at both of them and asked, “Which plan do you guys have?” McNeil and his colleague stammered for a second, and mumbled, “We are still evaluating our options, but no, we don’t own it ourselves.” It took about a minute for the woman to conclude that she didn’t need it either, and the two left without the sale. Make it a point to let your prospects not only know that you own LTCI, but what the plan design is and what you pay in premiums, McNeil said.
Help people find premium dollars. One of the main concerns that people have about buying LTCI is their ability to pay premiums as they get older and live on a fixed income. McNeil uses the following ways to help prospects come up with the money for premiums:
Use dividends or interest income.
Redirect life insurance policy dividends that may just be purchasing paid-up additions, and use them to pay for LTCI premiums. Beginning this year, new federal regulations permit 1035 exchanges from both life insurance and annuities.
What if the prospect is about to retire and has been paying for long-term disability income insurance and doesn’t need the coverage anymore? Simply reallocate whatever he was paying for LTD insurance toward LTCI. And now, depending on his company’s tax-filing status, the LTCI premium might be partially or totally tax deductible, while the LTD premium was not.
How about someone who may have an old life insurance policy with a fair amount of cash value in it that is clear will not be needed for either his retirement income or as an insurance asset upon death? You can annuitize the total cash value and use the monthly income to pay all or part of the LTCI premiums.
Build the anticipated LTCI premium into the prospect’s retirement plan. For example, if the prospect and his wife want $10,000 a month to live on in retirement, McNeil said that he builds a model to include $11,000 a month of income.
If the model and the couple’s assets and income are adequate to meet their higher income threshold, McNeil is able to show that the plan and their assets will be able to cover the $1,000 of monthly premium throughout their retirement. And since most retirement models include a cost of living for the income goals, and LTCI premiums are level, the percentage of income needed for the LTCI premium actually diminishes over time.
This is adapted from a longer speech given at the 2010 MDRT Annual Meeting. Used with permission. All rights reserved.