Your next LTCI sales idea: The buyer you want
By Stephen D. Forman (LTCA)
Long Term Care Associates, Inc.
Were it me, I'd leave the education of the nonbuyer to your competition, or better yet to the government. You've got no shot with them. Instead, your time is better spent teasing out the buyer you want from the herd by appealing to the themes which are important to him or her.
Ever notice how much zebras and horses look alike? Take away the stripes, and you could easily be forgiven for mistaking the two. Don't kid yourself. With enough patience and coaxing, you will eventually be able to saddle that horse, while no amount of time or energy will net you a result with the zebra. For thousands of years your peers have tried, but he cannot be domesticated.
Your stack of leads is full of zebras and horses. You're going to win some over with just a little coaxing, while others will demand hours of your time to no avail. If only there were some way to tell them apart before you picked up the phone.
Although we aren't at the point where nonbuyers give themselves away by painting stripes on their bodies, that doesn't mean we can't tease the buyers out from the herd.
In fact, our colleagues at America's Health Insurance Plans have been collecting the data to do just that on a regular basis since 1990, and their newest results have just been released.
This periodic study is far-reaching in its scope: What factors towards government, family responsibility and insurance influence long term care insurance buyers' decisions? Why do nonbuyers refrain from purchasing, and what — if anything — would encourage them to change their minds?
When I compare my take-aways from the 2005 study against those from 2010, my personal sense is the two groups are becoming even more polarized.
Today's buyer is even younger and more affluent than before, while today's nonbuyer — for whom cost has always been a barrier — earns less than his peers and seems to be aging out of the product before our eyes.
The buyer has always been a planner, "Consistently, purchasers of LTC coverage are almost twice as likely to strongly agree with the statement 'it is important to plan now for the possibility of needing LTC services' than those who forgo purchase of LTC insurance."
On the other hand, what would lead someone not to plan? Believing they have very little to lose.
In fact, nonbuyers are more likely than buyers to underestimate the costs of care, to underestimate their risk of needing care, and twice as likely as their peers to expect the government to pay for their care should they need it. But I read something more into the AHIP survey than simply a case of misinformation or lack of education, and I believe it explains why most nonbuyers are zebras — don't waste your time on them.
When we examine the reasons why buyers buy, it's not about protecting assets — that's way down the list. The most important reason is altruistic: they don't want to be a burden on others. Such consideration and forethought goes hand in hand with the planner personality type.
Meanwhile, when we put the nonbuyers under the microscope and ask why they are not buying long term care insurance, a theme emerges: While cost is the biggest stated factor, concerns that insurers will raise rates, that the policies will not meet their needs and that said policies are riddled with loopholes are rising in importance in recent years.
Here's how I call it: There are some folks out there who understand insurance — they know what it does and how it works — and thank heavens for them. And then there are those for whom "Big Insurance" is muttered conspiratorially. I place the nonbuyers in the latter category. Outside of cost, do you see how each of their objections is really just a variation of mistrust?
Were it me, I'd leave the education of the nonbuyer to your competition, or better yet to the government. You've got no shot with them.
(And let it be said, because our industry has been running in circles trying to put saddles on zebras for so many years, I've never been convinced that our penetration rate was as low as 9 percent. Rather, when we look only at the horses, it's considerably higher, as our esteemed colleague Jesse Slome at the American Association for Long Term Care Insurance has crystallized beautifully).
Instead, your time is better spent teasing out the buyer you want from the herd by appealing to the themes which are important to him or her.
Drawing from the AHIP survey, you must ensure your prospecting messages and presentation language resonate with the planning theme. Second, your messages must include realistic and relevant costs so buyers can make informed decisions. Third, as much as we hate to admit it, the myth that Medicare will pay for LTC continues to exist. Make sure your talking points bust this. And remember this: today's younger buyer sees LTCI as a natural part of his or her overall retirement strategy. Key to his or her decision-making process are insurer reputation and your recommendation. Don't ever short-change your own influence in the process.
Finally, one theme is common to both buyers and nonbuyers alike: "Most purchasers (65 percent) did not know whether they had tax-qualified policies. In addition, over half of buyers did not know of the potential tax benefit associated with the purchase of LTC insurance."
While this fact would be egregious enough on its own, the error is compounded when we add that, "The single most important step government could take to encourage the purchase of LTC coverage is to offer tax incentives. More than 80 percent of those who currently forgo purchase of LTCI would be more interested in buying a policy if they could deduct premiums from their taxes."
From my previous observations about nonbuyers I would take that declaration with a grain of salt (particularly since I believe it's a smokescreen regarding their objection over cost); respondents have a tendency to say one thing and do another.
Still, I see little harm. Why not include a tax-advantaged message as part of every prospecting message and presentation? It's the information the horses are clamoring for, and there is no shortage of information to share (individual, worksite, PPA-friendly, tax-free benefits, annual updates, 30-odd state income tax credits and deductions... need I go on?).
With that, I leave you until next time, but I hope you've found plenty of new ideas you can utilize to avoid the nonbuyer you cannot convert, and instead attract the buyer you want.