Selling long-term care is a difficult business fraught with problems. Intermediaries have to cope with their clients’ lack of understanding of exactly what long term care is about, and, for the potential client; and their family, there is the guilt factor.
As many intermediaries know only too well, trying to sell long term care is like treading on eggshells. Telling a client who is in excellent health that in 10 or 15 years they may need round-the-clock care, is not going to help IFAs scale any popularity poll.
American intermediaries have a slight advantage in this situation, as in the US at least there is a growing acceptance that long term care is a product that should be high on the agenda of the middle-aged person with moderate savings. Particularly once they have accepted the premise that there is a chance they may need care in the future.
Professional intermediaries in the States have already turned this to good advantage. Harry Crosby works for GE Capital Assurance, and, more significantly, is the US record breaking seller of long term care – having outsold the previous record by $100,000.
Harry Crosby is a man you do not forget in a hurry. He is an imposing figure who speaks his mind and manages to combine persuasion with sensitivity – the key to long term care sales.
Crosby believes that while spelling out the facts to clients could be seen as scaremongering, it is the only way to get a point across to people who are, as he puts it, “in denial”. He sees the real challenge of his job as being to get this group to accept the statistics and realise there is a distinct chance that at some point they could need care.
Crosby’s maxim is blunt: “Two things could happen to you, either you could die suddenly or you could linger.”
While Crosby’s approach may appear a little brash to many intermediaries in the UK, it does have application here. The American market is similar to that in the UK, with just a few obvious differences.
It has been well documented that long term care sales figures in the UK are woefully low, and, until the Royal Commission announces its findings later this year, it is difficult to predict how the market will proceed.
But the overwhelming difference between the two markets lies in cultural belief. In the UK there is still the perception that the state will provide for you if you go into care.
But this, of course, is a gross simplification, since if you have savings over £16,000 you foot the whole bill, and, if you have £10,000 plus, you foot a proportion of the bill. If you have savings below £10,000 then, in theory, the state will foot the entire bill. But this is a grey area as it appears cash-strapped local authorities are making this contribution in a more discretionary way than had been anticipated.
Across the Pond
In the US, the ideology that the state is a kindly benefactor which will make provision for care, medical or nursing, has never existed.
Another notable comparison between long term care in the UK and in the US is the preference in the UK for people to stay and have care at home rather than in residential care centres. This may, however, be something that changes with the passing years as the extended family staying and living in proximity becomes less of the norm.
And, as residential care is more popular in the US, there have been innovative approaches to long term care, with surveys charting the needs of the ageing population.
One such scheme is the MDS programme which runs 18,000 nursing homes across North America and accounts for several million residents. It carries out a survey every year on the physical and mental wellbeing of residents to allow a care programme can be tailored to the clients’ individual needs.
But despite the differences in the two markets, the problems intermediaries face are surprisingly similar. Probably the most significant point about long term care is just when, where and who do you approach to sell it?
IFAs worry about alienating existing clients by approaching them and asking them to consider many unpleasant options. Think about it. An IFA approaches a client who is 59 and in good health, and asks them to consider paying a significant premium for care they think they do not need. Their savings could be in jeopardy if they need to go into care, but, they argue, they may not need care and there are other ways to protect savings.
The client adds that their children have told them that they needn’t worry, that they will look after them if they need care.
Advisers are concerned that this promise may have been made without thinking of the consequences. Put into such a situation, how many children are going to say that they won’t look after their parents? But an IFA can hardly question the sincerity of the son or daughter’s offer. How do they find out if they are really in a position to provide 24-hour care; or if they physically strong enough to lift up their parents who may be significantly heavier than themselves?
On grounds of affordability it may well be prohibitive for a client to take out long term care cover – but it could also be that the client is too old to qualify for affordable schemes.
It is quite common for those who have been “in denial” to begin to see the need for long term care provision as they enter their 70s and realise they are no longer as capable of looking after themselves as they once were. By this time, however, most providers would not offer cover, or only at prohibitively priced premiums. As one IFA in the UK said: “Trying to sell long term care is like pulling teeth – it is a tortuous process and does not make you overly popular.”
His point is clear. Given the choice between discussing the state of their investments and their ever increasing disposable income, most clients would prefer to dwell on the positive than consider what will happen if 10 years down the line they suffer from Alzheimer’s.
Hints and tips
With all intermediaries facing these problems, and those in the UK also having to contend with a cultural disbelief in moving outside of state provision, it is sometimes hard to imaging how anyone sells long term care policies. But there are key selling points that will help.
Dignity is important. Work on the basis that elderly people want to be independent and do not want to be a burden on their children. Children may pay only lip service to the question of providing care for their parents. Explain to both parties the actual realities of providing care, especially if the son or daughter has to care for young children as well as an elderly parent. Examine with potential carers whether they could hold down a full or part-time job and provide adequate care.
Consider affordability. The emphasis is placed on the cost of clients losing their savings if they do not have long term care rather than the actual cost of long term care premiums themselves.
Crosby has a clear philosophy when it comes to affordability. Firstly he ensures that the plan is affordable to the client and that they qualify for cover before he conducts the interview with them. These are the basics, he then constructs a plan for the individual that is affordable.
It is then simply a case of convincing the client that the plan is worth having.
“Affordability should not be an objection when you meet the client if you have done your homework. I think the most important thing is to stress that the aim is peace of mind. I don’t want to see my clients needing long term care. I hope all my clients waste their money on long term care. But if you have paid premiums for 12 or 15 years and you don’t claim how much of a mistake have you made?
On the other hand, what if you don’t have cover but you need to go into care, you could see savings of $100,000 plus disappear in just a couple of years,” says Crosby.