Boosting LTCI Production

Achieve success by learning how to prequalify prospects quickly.

By Karl Lueders

Long-term care insurance (LTCI) isn’t an easy sale. So you should not make it harder on yourself by targeting prospects who can’t afford it. Because of rising costs involved with LTCI, prospective clients have to qualify for it medically and financially. And while your carrier should have plenty of literature on pre-existing conditions that LTCI won’t cover and warning signs to pick up on when visiting prospects, carriers can’t help you figure out who can afford it. Here is a tip to help you sort out prospects financially. This tip should help you increase your sales by reducing the amount of goose-chasing you have to do.

LTCI offers two types of protection: health and asset, according to Margie Barrie with LTCI Consulting Group in Sarasota, Fla. Many people buy it to significantly defray nursing-home costs. But it is not cheap. Clients need to be able to afford to keep their policies—without cramping their lifestyle.

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At a minimum, individuals should hold at least $100,000 in assets that don’t include their house or car, she adds. They should be receiving an income of approximately one-quarter or one-third of that amount. The goal is to make the premium less than 7 percent of the client’s income. “If your prospect can prove these figures,” she points out, “then you have a solid LTCI candidate.”

But how do you determine a prospect’s financial tolerance for LTCI premiums? You have to meet face-to-face with him, unless you are working with a referral. Would you explain your financial condition to a stranger over the phone?

During the first part of your face-to-face meeting, determine the kind of care the prospect would like, Barrie notes. Home care is usually more expensive than facility care, for example, but most people would request that. Second, determine if the prospect has a family support system to fill in when the professional caregiver leaves for the day. If there is a family-support network, home care is an option. If not, the prospect shouldn’t consider it.

Once you know where your prospect stands on the kind of protection he would like, then find out how he plans to pay for it. If he has assets above and beyond the criteria mentioned earlier, then you can begin to prequalify him medically. If not, it’s best to end the visit politely and move on to your next prospect.

Because LTCI has so many emotional ties to its purchase, it is easy to get sucked into conversations that don’t lead to any sort of sale, Barrie cautions. By knowing the red flags and learning how to spot them, you can cut the cord quickly before committing too much of your time.

Karl Lueders is a contributor to Advisor Today.