How to Prosper in the New World of Fewer Carriers, Increased Premiums and Stricter Underwriting...
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Transcript of How to Prosper in the New World of Fewer Carriers, Increased Premiums and Stricter Underwriting...
How to Prosper in the New World of Fewer Carriers, Increased
Premiums and Stricter Underwriting
Harley Gordon
1
Agenda…
The new math
The new marketplace
Penetrating the marketplace
Repositioning yourself to succeed
The message
2
Some quick notes..
Consider the term extended care
Men are serious centers of influence They do not respond to risk They will however respond to
consequences
The new math
Carriers were divided into two business models
Public companies: Short-term: Buy market share Price aggressively “Flexible” underwriting Aggressive compensation Re-price opportunistically
Mutual fund business model: Long-term Not driven to buy market share Price conservatively Stricter underwriting Rational payouts Dividends if claims are favorable
The mutual fund model won
All carriers share the same model Price conservatively Strict underwriting Rational compensation
The historical marketplace of selling from leads that generated those with Prior experience with modest net worth Health issues
The new marketplace…
The market has shifted irrevocably to those With no prior experience The wealthy
Two reasons1. Those with no prior experience are far more
likely to be underwritten2. The wealthy can afford the premiums which
now reflect the risk
Penetrating the marketplace
COIs are the key to success
Financial advisors
Attorneys Domestic relations Special needs
CPA’s / accountants
Current strategy…
Educate COI about… The client’s risk of needing care backed by statistics The cost of that care and how it impact the client’s
finances Perhaps the risk of being sued
Then educate the professional about how LTCi… Protects assets Allows for independence, choice of care and where it
is delivered
Position yourself as a long-term care insurance professional and
suggest they work with you…
May I ask youMay I ask you……does it appear to be working?does it appear to be working?
What’s missing…
A. Not enough time spent on what the product does or features?
B. Failure to more fully explain your area of expertise?
C. Failure to understand their culture?
D. They simply don’t get insurance
C
The result often is…
FA’s “yes you to death” and then…
Pick and choose who they send to you…
If they have “X ” in assets they don’t need LTCi
They don’t have enough to protect Those who are destined to be declined
CPA’s & attorneys “yes you to death” and then…
Pick and choose who they send to you…
If they have “X ” in assets they don’t need LTCi They don’t have enough to protect Those who are destined to be declined
Four Steps To SuccessFour Steps To Success
Step 1Step 1: Understand their : Understand their cultureculture
A financial service professional’s culture is planning They sell advice not product That advice leads to a plan The plan is funded with the client’s assets
A Life & DI professional’s culture is planning They sell advice not product The advice leads to a plan The plan is funded with life insurance / disability
income insurance
The culture of estate planning attorneys is planning They sell advice that leads to a plan
CPA’s work in a culture of planning They sell advice that leads to a plan
In effect, they are inIn effect, they are in the education business the education business
Step 2: Develop a message consistent with their culture of education and planning
Consultative Engagement:A selling philosophy consistent
with your targeted audience
Consultative Engagement consists of educating a client about how severe the consequences to those he (or she) loves would be if (never when) an unexpected event happened
Once educated, the client has to make a decision. He may decide… Those consequences are not severe; or They are severe enough that he will want
you to take action to protect those he loves
Consultative Engagement is about education
You want to be in the education business
Step 3: Have mastery over the subject matter &
consequences
This you know… The need for care is caused by two
impairments: physical & cognitive
This you may want to know… As impairments progress they:
Severely compromise the ability of the individual to get through the most basic of daily routines and or
Severely compromise the agility of the individual to safely interact with others or their environment
“Compromise” is a critical word. It shifts the discussion from “him” to “them”
In turn, this sets into motion the two sets of serious consequences providing care has on “them”
1. Emotional & physical consequences Others must put their lives aside; They
have no choice This has a direct impact on their emotional
& physical wellbeing
2. Financial consequences Paying for care, by definition calls for a
reallocation of income and assets. It therefore disrupts retirement plans
Step 4: Educating the center of influence
Let’s start with this…
You want to earn the right to “sit at the table” with COIs
Position yourself not as a presenter of product for which COIs may or may not have interest in but…
A presenter of education about a subject matter that if left unattended could have severe consequences to the plans they created for their clients
Deploying Consultative Engagement
Consultative Engagement consists of educating a client (COI) about how severe the consequences to his business model would be if an unexpected event happened Once educated the COI is compelled to make a
decision. If he believes they are serious enough he will likely employ your services
Your job therefore is to educate the COI about the two sets of consequences
Putting theory into action:Expect what they think you will do,
…and then do the opposite
Expect they think the discussion will focus on the risk of “him” (the client) needing care… Talk instead about the subject of extended
care and its consequences to “them”
Expect they think the discussion will be about product & features… Talk instead about the need to create a plan
to mitigate consequences
Talking points re: Emotional & Physical
Consequences
Extended care is not a condition like Parkinson’s, dementia, stroke or diabetes
Extended care is not a place like a nursing home or assisted living
Extended care is a life changing event that has serious consequences to those who have no choice but to provide care
By definition providing care is all-consuming. This causes unintended serious consequences:
Providing care to chronically ill people often makes healthy caregivers chronically ill
It usually requires a child to put her life aside causing it’s own set of consequences
Her relationship with siblings that don’t help is severely disrupted
Providing care generally does not bring families together…
It tears them apart
If a client ever needs care, his or her life is not likely to end…
Someone else’s life is likely to end
Talking points re: Financial Consequences
Paying for care requires a reallocation of income &
assets…
By definition it disrupts a tax plan Life & DI professionals understand this message FAs understand this message Estate planning attorneys understand this
message CPAs understand this message
By definition is disrupts a plan to allocate income to keep financial commitments FAs understand this message
45
By definition it disrupts a plan to wait out a down market FAs understand this message
By definition it disrupts a special needs plan Estate planning attorneys understand this
message Life, DI professionals understand this
message
Then offer a plan to mitigate the consequences you just educated the COI about
The plan is to keep the client safe at home while mitigating the two sets of consequences
Put another way the plan is to place the family back to where they were, as best as possible prior to an unexpected… Death Disability Need for care
Be prepared deal with objections & misconceptions …
My client has sufficient assets to pay for care
Assets don’t pay for care, income does. The problem is that paying for care forces a reallocation of income directly effecting the client’s ability to keep financial commitments
$600,000 = $30,000 *
$1,000,000 = $50,000*
$1,500,000 = $75,000*
$2,000,000 = $100,000*
* Assuming a 5% return, before taxes and that 100% of portfolio is committed to income
Even so, my client has more than sufficient assets to pay for care
That’s true, but a couple of thoughts… Taxes on the sale of assets Selling into a down market Liquidity
Then there’s the very real issue of who, where & how…
Who is going to provide the care?
Where is it going to be delivered?
How will it be coordinated over the years care may be necessary
By definition your client will likely not be able to make these decisions forcing others to do so
Then educate the COI about what LTCi really does…
It provides a stream of income that is used to pay for care. By doing so it allows those he loves to…
Supervise rather than provide care. If there are children this becomes…
A second gift of life
Having others provide care mitigates the first set of consequences
54
Since care is paid for, income does not have to be reallocated. This allows the client to keep prior financial commitments
Since little or no funds have to be used the retirement plan remains uninterrupted
Having someone else pay for care therefore mitigates the second set of consequences
Summary…
Understanding the culture of those you want to work with allows you to create a message that resonates with them
If they are educators about a subject that has an impact on their clients whether it is law, finances or taxes…
Then you want to be perceived as an educator about a subject that is of critical importance to the COI’s mission
30 second elevator speech…
I am in the the field of extended care. I work with attorneys CPAs and financial service professionals to help them create a plan that protects the emotional, physical and financial wellbeing of their client’s families