Linked benefit sales for your "no's"Article added by Julie Gelbwaks Gewirtz on April 20, 2010
Julie Gelbwaks Gewirtz

Julie Gelbwaks Gewirtz

Joined: October 13, 2006

What do you currently do with your prospects that say no to traditional long term care insurance? Out of every 10 appointments, how many do you close? I would guess that there are approximately five to seven prospects out of every 10 that reject your offer to sell them this extremely vital coverage. You could be losing many of those terrific prospects just because of the simple fact that they are not being asked if they would be interested in something else instead. More than ever before, there is an opportunity to sell a linked benefit product to these prospective clients who just cannot embrace the idea of a conventional LTCI plan.

What is a linked benefit? It is a combination product where a long term care benefit is combined with life insurance or an annuity. This can be a solution that offers protection for several different financial planning goals. In a single life/LTCI contract, the client combines LTCI coverage and a guaranteed death benefit, but more importantly, asset control and preservation. These can also be called asset based LTC plans. They are a terrific alternative to the mainstream sale of LTCI.

A few of the common objections to buying traditional long term care insurance are that premiums can be increased, the benefit may never be utilized, or the client may just think that they want to self insure for the risk of needing care. By selling them a linked benefit contract, you can cover all of those objections. You see, depending on the carrier, clients can pay for this in a lump-sum or can use more flexible premium options where they pay it out for a handful of years. The terrific thing about utilizing the lump sum payment is that in most products, they have a 100 percent money back guarantee. So, at any time in the future, they can choose to get out of this contract and get all of their money back. Sound too good to be true? It isn't. It is just the way these policies work. And that is why it is a perfect solution for people who didn't want to buy LTCI to begin with. They can think about it as not really buying LTCI at all; instead, they are just moving money that they are not currently using.

It is a live, die, or quit mentality. If your client lives and they need care, they can utilize the long term care benefits. If he/she dies, there is a death benefit available for the beneficiaries. If the person just decides they want out, and quits, the insurance carrier gives them all of the money back (and more in some cases where there has been growth in the plan). The average age of those who purchase combo life/LTC products is typically in the mid- to late-60s, about 10 years older than the average buyer of a conventional individual long term care insurance sale. The premium they receive on average is in the $85,000 range, and the underwriting is a bit different than traditional LTCI underwriting because it combines some life insurance mortality risk with the morbidity risk in LTCI. It also can be more liberal because the first dollars paid out at claim time are coming out of the lump sum premium deposits. They tend to give the insured about two times the amount invested for the death benefit and about five times the amount for the LTCI benefit they can receive, but this varies widely by carrier and age of the prospect, so be sure to check out your individual situation first before presenting anything specific.

I have been told many times that it is not the consumer rejecting the linked benefit plan, it is the agent who is too intimidated to bring up the subject. Just think about that for a second. If that is actually true, then the insurance industry needs to make some serious changes. It can be an extremely simple approach. The reason for this is that it is all about asset relocation. The client should be asked, "If you don't want to buy long term care insurance, what assets will you use?" So many of your prospects must have money sitting in a CD that is earning only 1 percent to 2 percent. What about the life insurance contracts that are no longer needed? Moving the cash value out of those and into one of these plans is a no brainer. And then your response should be, "Let's look at how we can formulate a strategy to leverage that money." This really is just a smarter way to self insure.

The timing of selling a linked benefit product in this current environment is just perfect. Interest rates are low and people are concerned about putting money into the market. These products are chock full of guarantees -- guaranteed death benefits, guaranteed interest rates, guaranteed return of premium, guaranteed long term care benefits and there is even the availability of getting a guaranteed premium (non-cancellable policy) for an excess LTCI benefit that is offered for purchase. Combo products brilliantly address the climate that we are in, so I highly suggest that you get rid of that fear and begin utilizing them. Now is the time for the repositioning of assets to benefit your clients.

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