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Supersize LTC Marketing With
Information, Education
By
Rich Hopcroft
| February 2003
In a capitalist society such as the United States, markets
have a tendency to correct flaws such as the current disparity between
consumers covered by long term care insurance and the uninsured who will need
LTC.
This disparity exists largely because many Americans are unfamiliar with LTC
and its funding options, resulting in the largest sponsor of LTC being
Medicare and Medicaid. But such a disparity is not likely to exist for long in
a capitalist system. Capitalism will create balance. It will do this by
rewarding financial services companies that are first to adapt mass-marketing
tactics that help consumers recognize government-pay programs do not have the
same desirability as private insurance. You could say, such firms will succeed
by “supersizing” their LTC marketing efforts.
Companies that are first to serve a growing population with a looming need
historically have reaped rewards for years to come. Coke moves more soda than
Pepsi. McDonald’s historically sells more burgers than Burger King. Leaders
like these beat the competition to market and have long since been proven
right for doing so. Financial services companies would be wise to heed their
example regarding LTC insurance.
The Opportunity
There are plenty of opportunities right now. For instance, LTC insurance
policies have renewal rates that are three times higher than other types of
policies. Americans are expected to spend about 11% more on LTC insurance
every year. That equals more than $800 million to be spent on this kind of
insurance this year alone.
Also, the prospects for markets are promising. For example, owners of
C-corporations can buy LTC insurance for themselves, spouses and employees as
a tax-deductible pre-tax benefit. In one greater metropolitan area alone,
there are 68,000 registered C-corporations.
Women are disproportionately affected by LTC needs because of their longer
life spans. They make good prospects for LTC insurance because of the peace of
mind it offers. Women with LTC policies know they will be taken care of after
their children move out and husbands pass on. For this reason, they are
already the most frequent financial decision-makers for the home.
Baby boomers, the world’s most prosperous generation, are observing the
effects of LTC on their parents. They will likely seek the choice and
independence that LTC insurance can give. There are more than 176 million of
them in the U.S.
In addition, personal policyholders and existing clientele of life, health or
risk/casualty policies are already on file with insurance agents who have
their contact information and an existing relationship. One company is buying
up lists of personal policyholders and direct-mailing them information on LTC
insurance.
The Challenge
The challenge for producers is that prospects are on the very beginning of a
learning curve, and need more information before they buy LTC insurance from
an agent or even refer friends to an agent. If people are slow to listen to a
LTC insurance presentation, that is probably because they do not yet know what
LTC or LTC insurance is.
Some people don’t yet see that LTC insurance is for them. For instance, one
agent I know says he gets calls from people who want to purchase insurance for
a parent who is going into a nursing home next week. When he asks if they have
considered a policy for themselves, they say, “Heck, no. I’m only 45.” Another
agent, someone from a captive agency, claims that her life/health clients say
LTC insurance is too expensive. Those are common refrains from insurance
agents who see more challenge to LTC insurance than opportunity.
Sadly, as few as 6% of adults have LTC insurance, even though as many as 60%
of them will require LTC in their lifetimes. Also, up to 30% of Americans
mistakenly believe their life-health policies cover them against LTC care
costs.
The Solution
Insurance agents wary about future profits in LTC insurance sales should at
the bare minimum set up a systemized new-business initiative that gets out
information on LTC insurance to their existing clients. Getting a list
together and content for one mailer that can go out every month casts a wider
net for this new opportunity without being so time-consuming that it takes the
agent away from more tested profitable underwriting. Traditionally, direct
mail brings in a 1% to 3% response rate.
An agent going after 150 to 300 people who closes just one or two deals is
more than paying for the cost of postage.
Sales professionals shouldn’t overlook online marketing. Material on the
Internet is easy to share between business owners, personnel offices, and
employees who make up the fastest growing market for LTC insurance as
voluntary benefits.
Also, 70% of employees in blue-collar positions and 80% of employees in
white-collar occupations are online. The top two reasons people use the
Internet are for using e-mail and to do product/service research.
If an agent is marketing to existing contacts, then the agent already has an
existing relationship and is able to e-mail them, per applicable regulations
and guidelines. If an agent is going after new prospects, then the agent
should tie the online marketing with a primer direct-mail piece that gives
prospects the opportunity to opt-in to the e-mail campaign.
Insurance agents should make their outreach to these promising markets
educational. The agent mentioned earlier, who encounters 45-year-olds who
believe they are too young to buy LTC insurance, may want to quote a doctor
who says that strokes can happen to people as young as 41. The captive agent
referenced above, whose clients believe LTC insurance is too expensive, should
get out the message that this costs just pennies today and can pay out as much
as hundreds of thousands of dollars should the policyholder ever require LTC.
Personal policyholders who claim the down stock market requires them to forego
this type of coverage should learn via the insurance agent that LTC costs are
between $50,000 to $100,000 per year and can wipe out their assets.
Supersizing educational outreach--that is, taking on mass-marketing tactics in
addition to the direct-sales approach--establishes the insurance agents on the
frontlines of the sales process as brand names in funding LTC.
Financial service professionals, let C-Corp business-owners, women, baby
boomers, existing clients and personal policyholders know en masse that
Medicare and Medicaid can’t always fund the best future. Let them know that
health insurance doesn’t cover most LTC cost. And let them know this kind of
protection is not just for senior citizens.
Currently, these groups don’t know these crucial facts and they will reward
this knowledge through LTC insurance referrals and renewals.
Rich Hopcroft is chief rainmaker with Relationship Biz, Southfield, Mich., a
national marketing firm specializing in financial service sales-growth. His
email address is rainmaker@relationshipbiz.com.
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Copyright © 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.
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