LTC Bullet: LTC Summit Smashing Success
Friday, October 30, 2015
LTC Comment: Brilliant conception, flawless execution and best-of-all free admission marked the live and online 2015 National Long-Term Care Insurance Sales Summit in and from Washington, D.C. Detailed notes on each presentation follow the ***news.***
*** MAGA’s Brian Gordon was recently interviewed on Kevin Price's Houston-based radio show, "The Price of Business.” The topic was LTC, proactive planning and emergency strategies. The interview is on YouTube. Here's the link: https://youtu.be/9lewCmrNON4 . Check it out. ***
LTC BULLET: LTC SUMMIT SMASHING SUCCESS
LTC Comment: If you missed this year’s free “Long-Term Care Insurance Sales Summit,” you missed one for the history books. The live event took place Tuesday, October 27, 2015 in Washington, DC, but most participants followed it live as we did via online streaming.
Fortunately, if you were otherwise occupied on Tuesday, it’s not too late for you to glean this program for LTCI knowledge, insights, sales tips, and motivation. According to the program’s sponsors, you can order 24-7 on-demand access to video recordings of the whole days’ sessions for 90 days here. Alas, the recording, available for $19 on the day of the event, now costs $49. Still a steal!
To whet your appetite for more, Damon and I took notes on the entire program. They follow in the single longest LTC Bullet ever published. If the notes seem to become clearer and more detailed around mid-day of the program, that’s because Damon took over the note taking to give me a two-hour break. Well done!
Notes on the LTC Summit held Tuesday, October 27, 2015
Scope out the agenda here: http://www.aaltci.org/2015summit/program123.html
The program began a little after 8:00am EDT with AALTCI president Jesse Slome’s introduction and welcome to the 2015 National Long-Term Care Insurance Sales Summit followed by four “bonus sessions” delivered by Jesse himself on Short Term Care Insurance.
8:15 AM - 8:50 AM
Primer on industry and the product. New organization with mission to put SLTCI on the map: www.shorttermcareinsurance.org
Recovery care product; LTCI light. Lots of different products. Coverage for SNF, ALF, and some home health care for less than one year; some as few as 30 days.
Regulations governing LTCI do not cover SLTCLI. Market penetration still small. Product in very formative stages.
Seeing interest from major insurance companies. Sales are growing. First half 2015 sales up 71% over same period 2014. 26,000 policies closed.
Who is buying SLTCI? A senior product. Different than short-term health care to cover gap. Age 61 and older: 60s and 70s. 4% are over 80. Can write SLTCI policies on older people.
10 or 11 companies selling the product. Medico, Aetna, etc. Surveyed 9 insurers.
Benefit periods: most people buying a year of coverage, getting maximum benefit. Half of policies are 90 days or less.
People using as plan B if can’t afford LTCI or to fill the gap.
Sales opportunity: for LTCI producers, this is currently “Plan B” option. Ideal affordable option for client declined for LTCI. Go back to clients who were declined and offer SLTCI.
If you sell Medicare, Jesse presents on dovetailing SLTCI with Medicare. Observation status problem is a gap SLTCI can bridge.
71% growth is just the beginning. Jesse proud of relationship with media. Every week in major media. Counter negative publicity about LTCI. So far no negative publicity about SLTCI.
Visit website which will have consumer and producer sides. Sales tools, etc.
Recordings available for $49.
Types of people for SLTCI: can’t, won’t, or waiting for LTCI.
Can’t: SLTCI is ideal for people you cannot get LTCI. Height/weight criteria may prevent coverage. Diabetes with high blood pressure, with arthritis, pain medication, osteoarthritis, even stroke can be accepted. Even a home care policy with memory issues. No cookie cutter standard. Some protection better than none. 49% of LTCI claims are over at one-year mark.
Won’t pay the cost: Jesse advocates good, better, best strategy. Compare single male or female: 360 day policy. Comparing LTCI vs. SLTCI. People expect SLTCI policies to be cheap but they are not. 360-day with zero elimination period. Don’t have 90-day certification requirement that keeps LTCI cheaper. SLTCI also has zero day elimination. Very attractive for single women.
Waited: Age ratcheting down for LTCI. In SLTCI policies not an issue. Market starts at 60 to 65 mostly; high ages also. Learn more at the website: www.shorttermcareinsurance.org
Why SLTCI works for Medicare. STOP! For years, everybody has looked and said need to get Medicare producers talking about LTCI. Perceptions of LTCI are not positive. Let’s accept reality. They don’t want to hear about something that sounds like LTCI. SLTCI sounds like LTCI. You have to change the terminology. Call the product what the insurers call it: “Recovery Care.”
Major gap in what Medicare covers and does not cover. Observation claims; NBC Nightly News report, 3-minute video; if hospital categorizes as observation, get same care, 1.8 million; once categorized as observation not considered hospitalized. So go to SNF, but Medicare does not pay. You were not hospitalized. Reason for Medicare producers to talk to their prospects and clients about “Recovery Care.”
Medicare is vulnerable entitlement. That’s why observation care is hard for Congress to change. If fixed, you drop the coverage. For now it is real and this is an affordable solution.
Prospects for recovery care are Medicare prospects. They are also your LTCI prospects who assume Medicare will cover them.
Learn more by watching the NBC report. It will open your eyes. Great YouTube video to show prospects.
How to be successful in SLTCI or Recovery Care
1. Review your declines. Tell them benefits of product they may be able to get.
2. Anticipate your declines. Offer Plan B ahead of decline.
3. Too old: Many products go well into the 80s.
4. Good, better, best approach. Position SLTCI as “good.”
5. SLTCI uses unisex rates. This is the only way we can get you both covered.
6. Layering traditional LTCI; going back to clients to cover the first 90 days.
7. Property casualty (PC) agents. Ads for compare.com. Gives ability to buy car insurance from all companies; Google owns; eating PC producers’ lunch. State Farm is broadening from car insurance. SLTCI is a way to partner with PC agents.
End of beginning sessions on Short Term Care Insurance
Welcome by Tom Riekse, Jr. of LTCI Partners: Introduced Jesse.
Jesse: Thanks to LTCI Partners: lined up sponsors; made it happen. LTCI carriers underwrote cost of putting on event.
20 plus sessions. All being recorded. Streaming live throughout the day. A few people in Hawaii, very early there.
Underwriters panel at end of day with questions from viewers at home.
Thanks to insurance media services and National Underwriter that ran ads about the Summit.
You can order on demand recordings of full day of sessions: insuranceexpos.com, click on the “on demand” button.
9:15 AM - 9:33 AM
5 Ws of journalism.
Who: CLASS Act, Connie Garner, Ted Kennedy. People work through organizations. Modeling: Bruce Chernoff, SCAN, Nov. 17 briefing with Health Affairs; Leading Age, Larry Minnix; AARP; HHS Center for Innovation; ASPE. Designers: Bipartisan Policy Center looking at proposals; LTC out this December; cutting costs and making services more affordable; LTC Collaborative, Howard Gleckman. Minnesota: looking at adding LTCI to Medi-Gap. NAHU issue paper. Paul Forte of FLTCI Program: create FLTCI for all.
Where: Minnesota, California around duals, Hawaii universal LTCI but Governor lost; New York doing education campaign.
When: Driven by federal elections; only client who has said anything about LTCI is Hillary Clinton; might lead to proposals if she becomes president. He thinks change will be incremental.
Jimmo case: don’t have to be able to improve to get Medicare. Medicare up from 3% to 18% for LTC. Medicaid changing to HCBS.
With the Affordable Care Act, adding to Medicaid. States integrating health care systems with Medicaid. Why not do same for LTC? Aligning post-acute and LTC for dual eligibles.
Sleeper issue: adding LTC to IRAs and 401Ks.
Medicare for all: not so likely. CLASS defeated so nothing like it being proposed.
Jesse questions: What’s likely to happen?
Answer: don’t duplicate failure. Section 125 plans; not a lot of lift for that. Changing restrictions on IRAs and 401Ks possible. Developing connection around annuities.
What is greatest vulnerability for traditional LTCI? Claims denial is what gets the press concerned.
9:34 AM - 9:51 AM
Snapshot of what’s going on from regulatory standpoint. Rates and rating practices.
First NAIC. Passed changes to LTC model regs and model bulletin. Attempt to do something regarding closed blocks and new business. NAIC working groups for more clarification and work to implement.
Health actuarial task force: LTC pricing subgroup. Companies now have to do annual recertification of adequacy of rates. Carriers concerned about amount of information and security. Looked at combo products. How do they work with the LTCI rules?
Senior issues task force: look at updating consumer disclosure. Changes being made re disclosure. Significant changes to Appendix B, the LTC personal worksheet. Collect info on income and assets. Building in more disclosures about possibility of rate increases. Variation across states. Public hearing in Minnesota.
Number of states have implemented LTC studies. Some states capping rate increases, even retroactively. Unique age-based limits.
Reg changes. Model regulation and Model Bulletin. Too detailed to summarize; see available video recording of the slide presentation. Other state activity: lapses and notices; independent claims review; state health benefit exchanges—should LTCI be assessed to fund those exchanges?
Partnership programs still out there. Just about every state has one; renewed activity in MI, IL and NM. Companies have to report to HHS about Partnership activity; funding went away; NAIC leadership will send letter to HHS to try to get resources reassigned to Partnership effort.
Interstate compact: get approved in many states. Five year review.
Fiduciary rule of Department of Labor: concerned about expanding definition of fiduciary. If company provided LTC, need to be a fiduciary? Need for exclusion?
What’s next? Something significant has to change. Product with 30- or 40-year tail but little flexibility to change rates. Need that for viable market.
Jesse question: Enough already! What makes states positive and excited.
Answer: Innovative products like combos. Organizations like Bipartisan Policy Center; big solutions. Role for public backstop?
9:52 AM - 10:09 AM
Roger Loomis, Actuarial Resources Corporation: Are future LTCI policies vulnerable to rate increases? For new issues, how likely rate increases? Old books have a problem. But what about new issues?
Three ways to approach. Qualitative or predictive modeling.
Qualitative: premiums higher now than in the past. Have learned from experience. Products less risky. Still companies scared. Most have pulled out. Afraid of this project. Buffet quote: “When others are greedy be fearful and vice versa.”
Lapse rates most important. Six large insurance carriers in business a long time, provided data. How have assumptions changed over time? How confident can we be?
Morbidity assumptions now higher: 108% of what companies have seen in the past.
Mortality improving. Lapse assumptions very conservative now. Assuming people will hold on to policy for life. No downside risk. Risk margins are higher; into 10, 12, 14 percent levels. Premiums are already much higher and companies’ premiums are much closer to each other.
More detailed model from actuarial perspective. Apply modern standards to earlier years. Look at claims, lapses and mortality. Look at those rates and figure confidence. Compare to 2000 and 2007. Have 16 times more data now. 70 times as much data for main policies. Confidence levels much higher now.
In 2000 would have predicted high premium increase rate 40%. In 2007, a little better. 2014, best estimate right plus or minus 20%. Really substantial probability of no rate increases. Can pay many more claims now without a rate increase.
Finally, overall probability of a rate increase. Looked at all the elements. 2000: 40%. 2007: 30%. 2014: 10%. 40% in past turned out to be low, but 10% now could be really, really high. Little room for downside.
Duke University study compared morbidity and mortality changes. Eric Stallard. People going to get old, live long, and be sick. That’s scenario of morbidity getting worse. Found morbidity improving. 60 is the new 50. Putting those assumptions together means people living healthier longer. More premiums collected to pay claims. Either way good. Bright future. Comfortable buying a policy now. Companies should reconsider the market.
Jesse question: look at specific kinds of policies to lower risk?
Answer: Some policy designs more risky than others. Premium level tied to CPI reduces risk for insurance company.
10:10 AM - 10:28 AM
Litigation in an ever-changing landscape. 3 principal points:
1. Volume of litigation growing. So is magnitude, dollars at issue, complexity. Sophistication.
2. What you as sales professionals do influences litigation.
3. Easy things you can do to reduce the risk
Stats. 22 lawsuits in 2011, no class actions; 2015: 48 cases, 5 class actions and it’s only October. April 6, 2012 everything changed. Relatively small number but tripled since four years ago. Significant increase.
This story drives home the reason: elderly insured on claim due to cognitive impairment; physician said moderate cognitive impairment; insurer sees this and claims rep calls facility to see if require continuous supervision; claims rep checked no; 24 hour round the clock; carrier denied claim; period of months not receiving benefits; lawsuit filed; then put back on claim but doesn’t pay gap period; case goes to trial; $34.25 million dollar award against carrier. Shock heard round the plaintiff’s bar world. Got bar thinking about LTCI. Now all of a sudden more sophisticated plaintiff’s lawyers getting interested.
Claim-based case. How is continuous supervision defined? Don’t get into that situation of misapplying definition. Most profound reason litigation volume growing. Expect continued growth at 10% through 2040; more claims mean more denials which means more litigation. Class actions also on the rise. Plaintiffs’ bar looking for ways to recover funds.
Why should you care and what can you do about it? LTCI litigation driven by three things. Communication and documentation. You are gifted communicators. Document your communication. Most litigation happens because of confusion. Why did you tell Mom that the rates will never go up? You know you would never say that. I just pulled out my file; I sent email that said rates can go up. Here’s what we talked about. Now you have contemporaneous documentation that will defeat a lawsuit or prevent it from being filed. Also increase communication with the family. Defuses hostility. Think about those things.
10:29 AM - 10:39 AM
10:40 AM - 10:58 AM
Nancy Dykeman, LTCI Partners: One of top producers in the country. Subject: “Right Messaging to Get Their Attention”
You’ve built your life around a goal for yourself and others. 88 keys on a piano. Think about melodies. 52 white keys; 36 black keys. All reflect ups and downs of our 88 years. Sometimes warm and soft; sometimes harsh and loud.
When you talk about planning, you must ask them about their little ones. These are highest notes on the piano. Must bring meaning to their lives. Are you asking emotional questions about their family? Our responsibility to ask all the right questions. You are their trusted advisor. Ask about dreams to show importance of planning.
Middle notes: 8 keys to left and right of C. Middle range. Solid notes, plans. Middle aged market is smart. Have experience. Have seen what happened with parents and grandparents. These clients put their thrust in you. Strong melodies; full of action. What do they want to be remembered for? So many in this age group we have not talked to? Concerned about parents but have not started to think about themselves.
36 black keys sharps and flats: can throw off plans. What about extended care? What is your plan? Especially if have not had experience of dealing with LTC. Poor health, accidents can and probably will happen. Living in denial not smart.
Nancy has been a music performer all her life. Must ask questions about what people want. Where receive care? Who beside you? What will pay for it? The three critical questions. We know great products and we have access to them. Getting up to that is creating a plan. Have to know the answers to these questions so you will be the one to provide the solution.
Book she read by Genova who wrote “Still Alice.” 50% chance of Huntington’s Correia. Legacy for young ones. Lower tones of the music. Life gets rough. Now in lower notes of later years; time to rest and remember. Quite possible six sets of grandparents. Sound of music. Elders in low notes. Everyone at risk of needing care. May need extended care. Carve your name on hearts, not tombstones. You can change lives, by creating music, asking the right questions.
Maya Angelou: people will never forget how you make them feel.
10:59 AM - 11:17 AM
Jesse is awesome; celebrate his creativity; free program; no greater advocate over the years.
Women are important focus, but now always the main focus as they should be. Lot of statistics. Benefits in products.
Long time ago a smart producer told her what sales process ought to be. Seven step sales process. He advocated the three: create need, solve need, close the sale. Do the first two and the third is just the paperwork.
Creating the need: women need it, women use it, and get the most out of it. Women need a lot of data. Need financial purpose validated. Financial planning takes a back seat for women. Genworth has done a lot of studies; found women don’t plan financially as much as men. 38% vs 57%. Women have lower savings. Women earn a quarter less than men; less in top tier jobs.
Women just don’t like to plan. That’s where you come in. You can give women confidence because you have the data. Millennial women don’t plan. Women like to be validated with advice. References Dallas Morning News story. Given bad advice by journalist. Single women advised not to buy. This is an opportunity to refute that kind of dumb advice.
Women are caregivers. We’re doing study called “Beyond Dollars” for three years. Trending numbers. What’s interesting this year: shows women are 50% of caregivers but 50% are men for the first time. But male caregivers are different than women caregivers. Included Millennials in survey. Late 20s and 30s. 69% already said expect to be caregivers. Why? Because seeing parents giving care.
Everyone skipping over GenXers. Only 50 million. GenY is 80 million: aka Millennials. Even more cynical about Medicare, Social Security and other public safety net programs. Very interested about planning for future. May be a way to get them an insurance product to help them plan today.
36% of claims come from single women. Married women: 29% of claims. Women make up 65% of Genworth claims. Married women go on claim younger than single women. When women claim on Medicare, Medicaid or out of pocket, exceed men on all marks.
Driver is men tend to perform less caregiving tasks than women even if the caregiver. Women feel need to do it themselves; men have no such notion. Men will pay for care. If relying on a man for your care, you are probably making a mistake.
Benefit design used to be more important. What’s important now: home care, ALF, inflation. Many ways to reduce cost.
My family will take care of me. 75% said that. According to Genworth study, 19% of adult children did not, 12% of siblings did not despite expectation. Care did not materialize. People having smaller families and they are more dispersed. Key issue with baby boomer women; 20% or so don’t have children. Caregivers aren’t always more likely to buy plans; 37% still think family will provide care. More of men have plans.
Need to start planning and need to focus on women.
Rate increases? Need to disclose there will be rate increases and need to help them plan. In the future this premium could change and likely will. People handle it better if they know what to expect.
Women need and use and benefit from LTCI more than men. Your job is to show need and plans. Go to Millennials not just middle aged. Don’t believe safety nets will be there. Less underwriting problems. Can have quite a large policy at the end of the day. Important to plan.
Important to focus more on women even though they don’t like to plan. Women graduating from college in greater numbers than men. Also in professional degrees, doctors, lawyers, dentists. More professional women coming and more wearing the financial pants in the family.
Jesse comment: add one sales line: When one needs care, woman will ask “What can I do?”, men ask “Who can I call?”
11:18 AM - 11:36 AM
Basics of retirement planning. Break down into two categories: essential (housing, food, health care); crucial to cover those expenses. Non-essential: travel, entertainment, etc. Won’t greatly affect life style. Pay money vs. play money.
Insurance and health care. LTC insurance. Make sure people can afford essential expenses. USA Today: top retirement worry over 50 is health care costs. Dilemma. Planning has to be done long before retirement. Better to buy younger than older.
Personalized health care pension. Two decisions in LTC. Decision to insure the risk. How pay for it is next decision. Can afford while working, but what about after I retire? Where will the premium come from?
Decision number two; how to pay for it. That’s what he’ll help with. Talking about traditional LTCI. Three possibilities: Immediate annuity. Irreversible decision. Give insurer an amount of money and they give you lifetime cash flow. Income for life. Old school. Lots of options. Fixed index and variable annuities. Market risk in variable annuities. His choice is fixed index annuity. Perfect because principal can grow if market goes up, but if market goes down no loss. Preserves principal better; fees lower; only a life insurance license needed. Assets used to fund the account: retirement or non-retirement assets. He likes to use retirement assets. Can take out at 59.5 but have to take out at 70.5. He advises use to fund health care personal pension. Works for any policy with an annual premium.
Two case studies: need to take RMDs. Create annual guaranteed annual income. $120,000 could have been left in, but what if a market crash? Have turned it into income to cover the LTCI premium. Income is still $6,000 per year.
Other case study: single female buying LTCI. Can afford premium while working, but concerned about paying later and future premium increases. Set aside $30K and defer income until age 66, able to create great plan. Guaranteed lifetime income of $2,000 or more. Could increase, but can’t go down.
11:37 AM - 11:47 AM
11:48 AM - 12:06 PM
Assume everyone knows need, product, expensive, tough on families. Risk resonates with affluent clients. We’re in the risk management business. Reduce risk; avoid it; comes down to retain or transfer the risk.
What’s on minds of affluent clients. Risk management strategy. Overview of options. Come up with a road map. Not so much about money; they have money. Clients say health care is number one, then inflation and longevity. Not specifically LTC, actually all health care. Medicare, expenses, extended care. Need more holistic discussion.
What’s affluent depends on who is defining. Under $250K investable assets or over $5 million. Even for folks with lots of money, concerned about health care. Be sensitive to that. Not immune to issue because you have money. Need to manage LTC and money.
Awareness of LTC higher than it has
ever been. Talking about strategies to manage risk.
Solutions out there: stand alone, linked, life with riders, etc., etc. Encouraged despite lumps product has taken recently. Tremendous transference of wealth and more planning solutions than ever before. LTC planning needs are being met by other products and that’s OK.
Affluent clients often say we are going to self-insure. I said you can, but managing a LTC event takes more than money. Put a plan in place. Timing, liquidity and health care. During bull market or bad market. Who will be quarterback to deal with the health care event? Could turn it over to LTCI carrier. Dig deeper than “self-insure.” Plan of care. Who will hire? Ways to overcome the objection.
Simplify the conversation. Emphasize risk management. Financial trigger? Emotional trigger? Gain client agreement. Get them nodding yes. Provide objective planning solution. Duty to make a recommendation and then follow up.
12:07 PM - 12:25 PM
Jesse Slome: How to Reboot Strategy for Increased LTCi Sales
Experienced in marketing for decades. LTCI costs almost tripled. If you think people with lower incomes prepared to spend more for optional insurance protection, naïve.
He proposes different way to present. Good, Better, Best presentation strategy.
We all do that. Coach, business, or first class air. Most people choose coach. Few fly first. Same is true for LTC or any discretionary insurance products. Same with gasoline, tires, get a haircut. We are consumers and so are the people you’re talking to.
Prospect age 60. When most likely to need LTCI at age 83. Don’t sell what everybody buys, best protection money can buy. Much can change between now and later. Wouldn’t buy now for 2039. But every day people who sell LTCI say buy this and you won’t have to think about it again. Curtails your ability to sell.
I’ve changed my good, better, best over time. Good plan may be one year protection. But call it two years. Freaks out some producers. Why comfortable with this being good. Like a coach seat. Affordable. Some protection always better than no protection. 2 years very likely to be sufficient. Half of claims satisfied in one year. Coach is better than deciding not to fly. If have good protection, can augment it later.
Better protection: costs and gives a little more. Option to increase coverage. Single best way to help consumers with the here and now. Low interest rate environment dictates what premiums will be. Choose a policy to lock in health today and buy more coverage in the future. One and done does not make sense. Confusing to look at the products and know how they handle inflation. One percent inflation is quite suitable.
The Best: three year plan, $150 per day, 3% compound inflation. That’s what most are selling. Doing that is like American Airlines only sold first class. Wait, before you leave, we also have these other seats.
Almost every study shows consumers are ready to spend $100 per month for LTCI protection. Good comes in under; better comes in at; best comes up a little more. Consumer responds he didn’t think would be this cheap. Consumer will be in disbelief and you reassure them. They will make a decision that need coach and will then consider what more to enhance. Most will take the better coverage.
End with couple statistics. Most producers accept 3% inflation because can’t sell 5%. Facts: see Sourcebook for these statistics. Claims mostly begin and end in the home: 1% annualized. ALF 2.3%. Nursing home: 1.9%. Why do you need 3% compound growth?
He has been, is and continues to be advocate of good, better, best. Industry needs a reboot. You can overcome objections, shock yourself when consumer agrees.
12:26 PM - 12:36 PM
What is the worth of your commissions? What you could sell your commissions for is the definition of value.
Market for LTC renewals. Sellers want to raise cash. Buyers are specialty finance firms.
In-force Rate Increases
Description of buying process: Review agency agreements, look over commission statements, enter data into actuarial pricing algorithm to generate price code. Two week process (approx.).
Next: Distill three factors into primary, generic categories: (1) Commissions schedule, (2) age of commission block and (3) detailed provisions in carrier agreement regarding how rate increases are handled.
Absolute value of commissions reduces over time. Policy lapses reduce the annualized cash flow over time. Declining cash flow stream.
Value as multiple of annualized commissions is not flat. Valuation multiple tends to peak at five years and declines after. Refer to recording for GRAPH.
Continual rate increases on in force business have an adverse impact on the value of a commission block if the agent agreement excludes commissions on rate increase premium.
Valuation impact depends on a very detailed carrier- and state-specific analysis. Buyers will pay more for blocks where the contract grants them commissions on rate increase premium.
12:48 PM - 1: 18 PM
Knight Kiplinger, Editor in Chief, Kiplinger Washington Editors, Kiplinger Personal Finance
DC – Dysfunctional Capitol
Kiplinger offers staff LTC coverage through payroll deduction. Kiplinger is very public about their support for LTC planning and know LTCi products very well.
Personal story of LTC coverage – having coverage greatly eased the financial burden on Mr. Kiplinger’s relatives recently. Coverage paid for home healthcare.
LTCi is not an easy product to explain. The Kiplinger publication carefully details how LTC coverage fits in a secure long-term financial plan.
“I want to talk today about America’s future: economic and political over the next two or three years. Without wishful thinking. Without partisanship. No prescriptions and recommendations, just cool, dispassionate forecasts, which is what we have been doing at the Kiplinger Letter for over 90 years.”
First a snapshot of the present.
“With all of this ominous stuff going on, should we assume that the expansion is just about over? Will next year, 2016, be the first year of sustained contraction? A mini recession since the Great Recession? I think not and I want to share with you some of the reasons:”
Looking at all the positives and negatives, it looks like we will see continued growth in the economy next year.
FED: When will they begin to change short term interest rates? Economy is too fragile to begin raising rates this year. Odds favor the beginning of the Fed raising short term interest rates in December. “easy-money regime”
End economic talk. Start talking politics.
Democrats to nominate Hillary. Who is her opposition? Not any of the moderate, conservative, republicans.
GOP nominee likely to come from the far right of the party. Perhaps Ted Cruz or Marco Rubio. Very conservative candidate is unlikely to pull enough swing votes therefore Hillary is most likely to give Democrats another four years of control in the White House.
Republican party doesn’t care: “They are going for ideological purity over electability.” They want to keep control of Congress and will likely do that in order to block the executive branch.
It will be years before we see a viable budget out of Congress. Budget by continuing resolution. “Kick the can down the road.”
Too much democracy on Capitol Hill. Gridlock.
“Gridlock created by extreme polarization in our society.” America secretly likes gridlock because it prevents either party from doing anything too extreme.
“Gridlock keeps each party as a counterweight to the excessive tendencies of the other.”
“The downside of gridlock, of course, is paralysis.” Paralysis prevents us from addressing necessary reforms: entitlement, Medicare and Social Security, and tax simplification.
“Political will is in very short supply.”
Acrimony in Washington. Don’t hold your breath for meaningful change for the better, but know… “this too shall pass.”
1:19 PM - 1:37 PM
“Engage in the LTC planning process … don’t be the gatekeeper to your client’s LTC planning.”
The audience Mr. Moore is trying to engage is the general financial professional, not people who specialize in LTC.
Objective: engage the “trusted advisor” with LTC planning
What is the sense of urgency? Stats: Risk and cost of LTC. Clients very exposed to this risk and cost and coverage has not been addressed in the long-term financial planning process.
Through basic analysis of LTC risk and cost, LTC is a client’s greatest risk.
Why are people avoiding speaking to their clients about LTC protection?
BUT AREN’T YOUR CLIENTS WORTH THE EFFORT?
Impacts of LTC risk and cost: The physical, psychological and financial reality of a long-term care event has a multi-generational impact on siblings, children and grandchildren. “Ultimately, the nature of this risk is like a pandemic in terms of its impacts within a family structure.”
Barriers to the LTC conversation:
LTCi enjoys unique tax treatment and delivers superior financial leverage.
Restructure the conversation as a strategic sale. The need for LTC is more closely associated with a disability that’s chronic in nature: physical or cognitive disability.
Potential buyer does not want to think about decades down the road, but does realize they could get hurt anytime.
Talk about LTC should be kept simple. Talk in terms of a disability that is either cognitive or physical in nature.
Age should not be specified in the definition of LTC.
Need for LTC impacts people of all ages. Mr. Moore presents a list of famous people with corresponding LTC event age.
Keep the LTCi product discussion simple as well. Think about LTCi as a strategic planning tool. Four key areas:
Tax treatments of LTCi are advantageous. Leverage of LTCi is amazing for what you pay.
In comparing LTCi to self-insuring we find that LTCi is a better value in terms of financial investment.
12:37 PM - 12:47 PM
What single women buy, but married women don’t. 82% of LTCI policies sold to married clients. 67% to women; 33% to men. Men don’t think they need this; they’re married to their long-term care.
We show women LTC; we show men return. Women will look at benefits and features as she may have cared for a parent. 40% of spouses pre-decease the spouse needing care. Show him a good return whether he needs care or not. Guarantee a 9% rate of return tax adjusted.
Help for uninsurable spouse. People get interested once they need to file a claim. Indemnity policy for the healthy spouse. Life insurance with indemnity rider. Two potential solutions.
Do you have any CDs? All should ask clients this question. Bankers are pushing people into CDs with money that could be a LTC solution. If they have CDs, maybe they can afford an LTC solution. Better way to use “rainy day” funds.
Learn linked benefits pricing. Confusing. Does not follow traditional pricing of LTC. Show different year durations.
High Earners Not Rich Yet: “Henrys.” Use monthly premiums at a price they can afford. Have your tool box ready. Have the women talk first. Get her concerns.
1:57 PM - 2:15 PM
Need to change the conversation. We begin the conversation too late when they are close to retirement. If important, why wait until age 50? Somebody else will have talked to them if you don’t. Needs to be part of every conversation you have with clients.
Our health insurance plans exclude custodial care. Potential significant costs uncovered. Paying for children’s and grandchildren’s educations important to many. Some retirement funds don’t transfer easily. Medical underwriting does not improve with age. More people with dementia under the age of 65.
3 types of people: who take your advice, don’t take your advice, or never heard your advice. 55% of clients say other expenses take priority. Add a rider to those contracts they already have. Prepare client for fact that may not be best fit for all time, but a start. Too expensive? How about the cost of care!?
Need to think about catastrophic riders when clients are buying disability insurance. Traditional LTCI is not the best solution for everyone. Look at all possibilities. Maybe use an annuity to pay a LTCI premium. Several case studies provided as examples.
2:16 PM - 2:26 PM
Sponsored message: Nationwide, Shawn Britt, Director of LTC Initiatives at Nationwide. Number one in availability (pay internationally for example), simplicity (all but one policy are cash indemnities), and ingenuity (only cash indemnity linked benefit now).
2:27 PM - 2:45 PM
The 5 Key Components of the New LTC
Who I am and why I’m doing it. Saw mother go through mini-strokes, broke her hip, laid all night on floor, major stroke, but didn’t kill her. Had promised would not put her in a nursing home. Cost of care in 1998 was over $250 per day. Watched everything go out. Lived on; ran out of money. Father broke. Sister’s husband diagnosed with Alzheimers. Then her husband dies. That was her LTC introduction. Two by four to the head. This info pulls people in. Have to build trust right from the beginning. Have to establish need. Solve clients’ issues.
Many of us are selling virtually. Can’t see body language. Still a sifting process. Have to see what makes them tick; what’s going to work best.
After I tell them about my experience, I ask questions. The more I know about you the more I can help you find a solution. My job is to be your advisor.
What is your biggest worry? Man: asset protection. Woman: don’t want to be a burden on kids. Turn it around and ask men about being a burden, etc.
2:46 PM - 3:04 PM
Story: Goldilocks and the three bears; samples porridge; too hot, too cold, one just right. Just right is what clients want to find. Simplification is critical. Choice is important. Men are hunters; women are shoppers.
Leverage is premium low enough and protection high enough it’s a good deal. Traditional LTCI is the best leverage. But objections are use it or lose it; premium increases; financial media criticism.
Some people pivot to the hybrid product. With life insurance connection, now the man costs more than the woman. Don’t have compounded growth with the hybrid product. Narrow market has $100K for both of a couple. So, cut traditional LTCI by half. Cut hybrid in half too to $50K each. Add up the two pools of money. Total premium is recouped by the life insurance benefit. Don’t feel like I wasted money. Do same thing but solve for premium, not benefits.
He tries with his advisors.
Simplify. One page. Traditional and hybrid. What each does. We have
more tools and resources now than we have ever had in the industry. Color
code. Summary: Enhance value; increase leverage; cost recovery; one
Talk about use of qualified money. Asset Care III using qualified dollars. How to use that for LTC expenses. Why use qualified dollars? For some it’s the only money they have. People starting to turn 70.5 and facing RMD. Many don’t need qualified dollars for income.
First cover the concept. Aggressive, moderate and conservative assets. What kind of money would they use first? Usually use conservative assets. Government gave tax incentives to get people to save. Example. Carve out $125K from your conservative funds. Take money from right pocket and put it in left pocket. Turn it into double. Life insurance as death benefit. Started these contracts 26 years ago. Can use the whole $250K for LTC tax free.
Guaranteed return of premium from day one. Joint life contract. If don’t quit and don’t live too long, death benefit goes to heirs. Using this for LTC, $125K gives $250K. Options up to age 85. $5,000 per person per month. One or both could use up whole month so have options to add more up to lifetime benefits. Continuation of Benefits Rider, separate policy, no cash value, just going to pay like traditional LTCI with a $250K deductible. Higher my deductible, the lower my premium. Noncancellable. Can never have a rate increase. Life time coverage for $3,000. Like a HSA.
That’s how all their options work. Has same tax advantages as traditional LTC insurance. Use health savings account to pay the premiums. Premiums locked in and lifetime coverage.
Look at qualified money aspect. IRS will not allow us to take qualified money and put in life insurance without paying taxes on it. Move money from one IRA to OneAmerica. Taxable distribution goes toward RMD.
Cover two people with one’s money; cover RMD; keep you from becoming poor.
3:24 PM - 3:34 PM
Even you can create and make a highly effective LinkedIn page. Whatever kind of agent you are: truism consumers today use the internet. People will look you up on Google. Give people the opportunity to check you out. Number one result is his LinkedIn profile. Paramount. This is like your storefront. If don’t have one, must get one over next two days. Join world’s largest professional network. Goal is to build into a colossus.
Tips: most important field is the name field. Don’t be gimmicky. With photo field 11times more looks. Simple clean head shot. Look business professional against a clean background: 400 by 400 pixels. Search Google for resizing pictures.
Branding headline: 120 characters to tell people most important things about you. Look at other people’s profiles, competitor or someone you respect. Make it stand out. Key word rich. Google looks for key words.
Contact information: click the pencil. Be sure it’s complete. People overlook Twitter, Facebook, websites. Add links to your key words.
Summary section: one of the most important. Write in first person and make it a conversation between you and your audience. End with a call to action.
Skills and expertise: long section. Use many skills and topics. All ways you want to be found. Complete your full profile. Do not give up. You can do it relatively quickly.
Tip #8: section on every linked in page allowing people to recommend you. Often overlooked. Jesse has over 100 recommendations. Ask people to recommend you. You can write their recommendations of you for them. Join Groups. LinkedIn just changed everything regarding Groups.
Tip 10: Promote your profile. Google
will promote it. “See my LinkedIn profile.” If you do this, you can
track your results. Most important thing you’ll do is create or improve
your LinkedIn profile.
Announced for president of USA. Top producer years ago. Face to face. Sales management. Marketing. Last summer back into the field. Went virtual. Once you go virtual you will never go back. Commute upstairs to downstairs. Idea to be successful in virtual sales.
Obstacles in virtual sales. Fear danger of internet. Screen sharing is safe but consumers may not know that. May want to see actual human. Conveying need without presence is difficult. Education is not motivation. Can't hold their hand. Key to successful virtual selling, be as human as possible. Not about technology. If you embrace these things the extra work will give you more freedom, time, and money.
Start with strong logo. His cost $45. Embrace social media. Have personal email. Good photo of yourself on all. Makes you human. Makes you real. Make the process real. Confirm appointments. Include website in emails. Interview not presentation. Have fun; be real; human conversation; ask questions; follow up. Explain why you’re unique, better than their local person. Ask detailed health questions financial questions. Not just for underwriting. Find their motivation; then solve for them. Every slide is a point of conversation. Don’t read your slides. Don’t be an educator.
Attempt to close on first appointment. Don’t lose the need, urgency, motivation. He closes two/thirds in first appointment. If can’t close, set the next appointment. Take an application? Send a welcome letter through the mail. Avoid email which can be avoided. Send priority mail. Keep in touch during underwriting.
Schedule delivery. Congratulate them. Have carrier send you the policy; you repackage with your folder; you send to the client. Finally, thank them and ask them for referrals. Stay in touch by email and snail mail. Once you go virtual, you will never go back.
4:14 PM - 4:32 PM
100% of you want more leads; 99% will watch this and do nothing. Hoping 1% may grow to 5%. Nothing is more important than having a website. He did it for one dollar in four hours. You can do it too. Why need a website? The world has gone online.
Step one: name game. You want your own domain name. Most important property you’ll own. Ease of recall for your users. Google searches. You have to create something new because you can’t afford to buy a great name. GoDaddy he recommends. Good customer service. Allows you to research names. “LongTermCareKansas” was available. Did buy ShortTermCareInsurance.org.
Step two: Design your website. Trial and error, but pretty simple. Select a theme from their templates. Business instead of personal. Start building your pages. Just start playing around with it. Drag and click. Home page and secondary pages. Name the pages with search engines in mind. Use hyphens between words. Keep it basic for starters.
Step Three: Manage your pages. Title should be unique. Type in descriptions for each page. Click publish when you like it. That will save it if you mess up. Navigation bar: the one confusing area. Has all the website pages linked. Home page, primary page, pages underneath it. Right click open settings button opening navigation panel click and drag. Practice.
Four hours later, he had simple website. Top of page two on Google within a day.
A website in and of itself not going to get you leads. People need to know about it. Promote your website on your business card, LinkedIn, etc.
Add a new page every month on something.
4:35 PM - 5:15 PM
Underwriting critical part of the process. Over last five years, more comprehensive. More medical records requested. Screening for cognitive impairment, used to be 85, down to 65 now. Much more intensive now. Placement rates better for higher levels. Placed more in standard class.
Soliciting questions from audience.
Four things affect placement. (Too fast to list; check recording.)
Advice on how to work with underwriters. Make sure people know there will be cognitive testing for older people.
Is end of year a better time to get a client through underwriting? Expediency is more for the field than for underwriting. We have three days to look at the application at Transamerica.
Pre-underwriting: what percentage of declined cases are reversed on appeal? Small percentage. Prepare clients for interviews. Get right the first time.
What percent of apps come in with cover letters? Fewer on care solutions product.
How is information related to family history being used? Genworth: Coronary artery disease and dementia. Viewed differently in LTCI than other insurance.
Underwriting for combo products net same result as for traditional LTCI?
Too technical and detailed to follow and transcribe: see video recording of this program for more.