Leveraging Long Term Care Insurance As the CLASS Act Moves In

Author: Frank Darras

Is now the time to expand your career and start selling long term care insurance? With the implementation of health care reform, Americans will have to consider the recent monumental changes whether they like it or not. Maybe it’s time, then, to review your portfolio and offerings for clients in this new climate of uncertainty.

Today, there are 40 million Americans aged 65 and older, and by 2020, that number will balloon to more than 53 million. By 2030, one in every five people will be over the age of 65. With an audience that large and medical expenses rising, long term care insurance may soon become “must have” coverage.

Unfortunately, a high percentage of seniors don’t understand LTCI and are not sure where to turn when planning for their senior care needs. For those of us in the sandwich generation, raising our own kids and watching our parents struggle with assisted living, senior centers, and skyrocketing nursing home costs, LTCI just may be our saving grace.

The Community Living Assistance Services and Supports Act ( CLASS Act) is a part of the new Patient Protection and Affordable Care Act (PPACA), signed into law on March 23, 2010. This new legislation created a national program to defray some of the costs associated with long-term care for working Americans. This voluntary program is aimed at helping caregivers and families who can afford it, while eliminating a percentage of the government’s financial burden in caring for America’s aging population. In many ways, CLASS is an attempt to keep our senior loved ones off welfare and out of substandard nursing homes.

Did you know that health care for working caregivers can cost 8 percent more than for employees without caregiving responsibilities? If those people cannot get long term care through their employers, there is a real opportunity for professionals to sell LTCI as an add-on to other offerings in their portfolio. By working with those who want long term care coverage, you can add to your bottom line and help get real solutions to good families in need.

Here are some helpful tips to make sure that you are successful and remain in compliance with the rules governing long term care insurance solicitation and sales.

Get educated

Becoming an expert advisor requires that you learn all you can about LTCI, the policies available, and the regulations governing them – including all the new laws and restrictions.

• Read the new federal and state regulatory requirements regarding the sale and solicitation of LTC polices.
• Understand the various long term care policies offered by the carriers you represent, and make sure you understand what your competitor is selling. Be sure the long term care product you offer clients is the policy that truly meets their individual needs.
• Sign up and take long term care and estate planning courses. You may want to get certified as a long term care specialist.
• Learn from people you know who have purchased LTCI and those who have accessed their LTCI when needed. Real-life examples that you can personally reference will be helpful during the sales phase.

Marketing

Once you are educated in all the aspects of long term care, you will need to expand your reach with marketing.

• Consider holding long term care seminars. Often, agents have educational booths at senior events where they can promote their long term care packages and provide education for customers.
• Maintain contact with your existing clients. New services and regulations are continually being developed and changed for the senior market and your clients will need to know about them.
• Leverage the CLASS Act and follow up on leads who have previously turned down your LTC services; they may not have been ready for LTC at the time, but circumstances may change – and certainly, the laws have.

The sale

Once you have great prospects, you need to close the sale.

• Real facts create the need for long term care, and sharing those facts, statistics, and “what-ifs” with your younger and middle-aged clients and prospects will help them understand. Most have aging parents and personal connections to the information you are sharing.
• Never use scare tactics or the old sales tricks of door-to-door insurance salespeople of the past.
• Explain to your younger and middle-aged prospects that rates for long term care coverage will be less expensive for them now rather than later. For example, a 45-year-old woman would pay an average of $645 per year; a 72-year-old woman would pay more than $3,600. Good health and youth add to reduced long term care costs.
• Educate seniors and middle-aged individuals about the importance of planning, but don’t overwhelm with too much information.
• Provide an outline of the long term care coverage when you first contact a potential applicant. Include a brief description of benefits, limitations, or exclusions; the terms under which the policy may be returned and the premium refunded; the relationship of the cost of care and the benefits; and the terms under which the policy may be continued, including any waiver-of-premium provisions.
• Ask applicants to complete a long term care personal worksheet; this will help you discover your client’s needs and offer the correct policy for them.

Remember that one benefit of CLASS is that it gives you the opportunity to share insurance company offerings with clients and explain how LTCI can protect their own productivity as an aging boomer or caregiver. Purchasing LTCI now, rather than later, eases the costs associated with an aging population, rising costs of care and the recent half-trillion dollar cut in Medicare. Leverage what you know, your client lists, colleagues, and new regulations to open up affordable opportunities for yourself and your clients.

Frank N. Darras is founding partner at DarrasLaw. He can be reached at (800) 898-7299.