Wednesday, February 25, 2009

Reserach Reveals Consumers Purchasing More Affordable Long-Term care Insurance

Some 400,000 individuals purchased long-term care insurance protection in 2008 according to a just-released report. The overwhelming majority (84%) of individual buyers in 2008 were younger than age 65 and three-fourths (76%) selected a more affordable approach to this protection by opting for coverage for a specific number of years.

The annual study conducted by the American Association for Long-Term Care Insurance, the industry's professional trade organization, analyzed data on 215,000 buyers of individual long-term care insurance protection. According to the organization's research, some 8.2 million Americans now have long-term care insurance protection purchased on an individual basis (typically through an insurance professional) or through a plan offered by their employer.

"Individuals continue to purchase protection at younger ages," explains Jesse Slome, the Association's Executive Director. In 2008, some 53% of individual buyers were between ages 55 and 64; compared to 50% the prior year. Another 24% were between ages 45 and 54 (2008). "The age of buyers keeps dropping as consumers -- especially baby boomers -- understand the cost-saving benefits of locking in good health discounts and ways to make protection more affordable," Slome explains. In 2000, the average age of an individual buying long-term care insurance was 67.

The number of individuals purchasing long-term care insurance protection for a specified number of years also increased according to the Association study. Just over three-fourths (76%) of buyers in 2008 opted for coverage for a claim lasting five years or less; a slight increase over the prior year (71%). "The most expensive long-term care insurance policy is one with an unlimited benefit period (one with no cap on the number of years benefits will be received)," Slome explains. "Consumers are right-sizing their protection taking into account available savings and retirement income. This cost-sharing approach can reduce the cost of protection by 30 percent or more."

Perhaps in recognition of cost-consciousness, consumers were fairly evenly spread in terms of the level of selected daily benefit. Just under one-third (31.5%) opted for a daily benefit between $100 and $149. "In current dollars, that amounts to between $36,500 and $54,385 in a yearly benefit," Slome notes. "But most policies offer an option so benefits keep pace with rising costs and 15 years from now, the value of the (higher) benefit would be $75,800 a year."

The complete findings of the study are published in the 2009 LTCi Sourcebook available from the American Association for Long-Term Care Insurance. For additional information, call the Association's offices at (818) 597-3227 or visit the organization's website:

Summarized Study Data

Age of Buyers (2008)

Under 45 7%
45 to 54 24%
55 to 64 53%
65 and Over 16%

Daily Benefit (2008)
Less than $100 6.5%
$100 to $149 31.5%
$150 to $199 35.0%
$200 and Over 27.0%

Benefit Period (2008)
2 Years 7%
3 Years 30%
5 Years 24%
Unlimited 13%

Premium Paid (2008)
Age Low High Average
35 - 44 $637 $2,830 $1,650
45 - 54 $1008 $6,440 $1,900
55 - 64 $844 $7,400 $2,150
65+ $1,883 N/A $3,350

Additional information can be found in the Association's Consumer Information Center.

Wednesday, February 4, 2009

Marketing Long-Term Care Insurance To Affinity Groups

Members of the American Association for Long-Term Care Insurance often submit questions via the organization's members only website. We solicit answers from leading industry experts and post them. I thought it would be valuable to post this one on our blog as well. As sales of long-term care insurance to associations and affinity groups grow, I believe you'll find this of value.

The American Association for Long-Term Care Insurance reached out to a leading national expert in the field, Joseph Pulitano of Advanced Resource Marketing, in Allston, MA.

The Question: I am agent of record for a large affinity group, and am debating whether to continue to use a mailback pro forma or to partner with an LTC specialty Managing General Agency (MGA). My question is, how many times more apps could I expect to receive by using the face to face process, vs the mailback process?

Joe Pulitano's reply: I don't have enough information on your group to give you a quantitative answer but I can certainly give some conceptual ones. In all of the associations and employer groups we market to we see participation rates much higher when the prospect is approached face to face with an agent.

The reasoning - Members/Employees have purchased life insurance and/or DI in the past and have perhaps purchased more than one policy. They tend to understand those products; the role they play in a person's overall financial plan and most people can adequately purchase them over the phone/mail/internet.

The people who have not purchased LTCi will hopefully only need to buy it once. For that to happen a well trained, competent agent who understands how to work affinity leads can guide a prospect through the role LTCi plays in a person's overall financial plan and help them purchase the right product at the right price.

Perhaps the best example of this is AARP. They have been offering LTCi to their membership for over 20 years strictly through over the phone and through the mail. Last year AARP contracted with a nationwide company of career agents to meet members at their homes and sell the product face to face. The results in most areas of the country have been phenomenal.

Yes, there are those prospects who do not want to sit with an agent and want to conduct business over the phone, internet, or through the mail, and as an MGA marketing to affinities we do accommodate those individuals with an on line education process and purchasing system.

When considering an LTCi MGA to handle your affinity there are several items you need to review:

1. What experience does the MGA have in affinity marketing?

2. Does the MGA have a regional of national base of agents who are experienced in working affinity leads?

3. What investment is the MGA willing to make to market to your affinity? Little or no investment means little or no leads.

4. Does the MGA have the ability to structure commissions to flow directly from the carrier to the affinity and the agent of record?

5. Does the MGA have an on line educational program Members can go to and get more information?

When an MGA is considering taking on this affinity project from you they may want to know:

1. What is the affinity between the association and the members?

2. Are other insurance products sold to affinity members?

3. What are the demographics of the affinity? There are some large affinities that will not be successful.

4. What is the retention rate of affinity members?

5. How long has LTCi been offered and what have the success rates been?

Affinity marketing of LTCi when marketed, sold, and administered correctly is a goldmine of opportunity.

Thanks Joe.

The Ask The Experts service is a benefit of membership in the American Association for Long-Term Care Insurance. To become a member, click here or type: into the address bar of your web browser.