Voluntary benefits, where the employees pay the full freight through payroll deduction, are booming. Voluntary plans let employers offer attractive fringe benefits like dental, vision care and disability insurance at no additional cost to the company.
Today, long-term-care insurance (LTCI), a crucial financial product, is poised to become a top voluntary benefit. Employers like LTCI because it can help employees stay productive at work instead of having to take time off to care for their parents and struggle with the additional financial stress. And LTCI is a wide-open field, as only a few percent of Americans have it.
Big organizations like large employers, unions and associations are courted aggressively by large benefits brokers. But there’s a lot less competition for smaller organizations—and relatively few of them have voluntary plans. This spells opportunity for independent agents.
You already have the customers—the business owners who rely on you for their business insurance. You already have their ear and a strong relationship you can leverage. That puts you miles ahead of a benefits broker who is cold-calling them. With the right approach, you can profit from the LTCI boom.
How group LTCI works; how it’s sold
Group LTCI is available to the employee, employee’s spouse and both sets of parents—so you can potentially make six sales for each employee. Most group policies are virtually guaranteed issue. There’s no medical exam; applicants just have to answer a few questions confirming that they do not have conditions such as multiple sclerosis or Parkinson’s.
The group premium rates typically have a 10 percent discount from retail. The benefit is portable, and employees can keep their policies when they leave. The renewals are usually a level 10 percent for as long as the policyholder pays the premiums—which can be many years, especially if he or she is in her 40s or 50s. Selling group LTCI effectively takes several steps. First, you need to represent at least two carriers that write group business. Look for carriers that have a recognizable brand name.
Next, you need to get the business owner or benefits administrator to sign on. Even though LTCI is 100 percent employee-paid, it still takes selling to convince the decision maker(s) to offer a plan to their employees. They won’t want to add a new benefit unless they’re convinced that it will truly benefit the business and employees, and won’t add more administrative burden to the human resources staff. Make sure to emphasize that your plan will:
• Provide meaningful insurance coverage for long-term-care expenses;
• Make the cost of insurance affordable over the long term;
• Provide flexible plan design and administration to address the particular needs of all your employees or members.
To stay under the radar and avoid competition from national brokers, focus on companies or associations with 25 to 200 employees or members. Organizations in this sweet spot are usually big and sophisticated enough to recognize the need for voluntary benefits and have the internal systems to support them. (Smaller organizations than this may not want to offer voluntary LTCI, but you can sell individual policies to the business owner and key executives. This is especially attractive now because LTCI premiums are for the first time 100 percent deductible as a business expense.)
Once the decision maker says yes, you’ve gotten over the first hurdle. Now, you need to sign up the employees or members.
The best way to do this is by holding enrollment meetings. You’ll meet with a group of employees and give a presentation on what LTCI is, what types of care it covers and the financial risks of long-term care as they plan their futures. Since it’s a discounted group plan, most employees won’t feel the need to do comparison shopping. You can hold separate information and enrollment meetings, but it’s usually simpler to do the enrollment right after the educational sessions.
With groups, you won’t have the same space and time to educate people as in a one-on-one situation, but some of the same principles apply. You must create the need because unless the employee feels a strong need for the product, he or she won’t buy it. They must be able to envision a time when their (or their parents’) health will change and will need care. Most people think they’ll just live forever or die peacefully in their sleep. You have to overcome their denial. Additionally, many mistakenly believe that Medicare will cover long-term care costs.
Voluntary benefits are a natural for any independent agent with a commercial lines book. With the right approach, you can readily increase revenues from existing business clients and strengthen your relationships—and even attract new customers. It’s a ground-floor opportunity for savvy agents.
Wilma G. Anderson is president of The LTC Exchange, an LTCI wholesaler that offers top long-term-care insurance products to agents and financial professionals. She can be reached at www.theltccoach.com. or firstname.lastname@example.org.