Surge In Interest In Long-Term Insurance About More Than Just Aging

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While most of the attention given to the selling of Long Term Care insurance has to do with marketing to the "sandwich" generation-or those Baby Boomers who are now facing responsibilities for both aging parents and their own children-a driving statistic is worth considering, one person told credit unions.

Bob Herum, director of distribution and development for American Life United Insurance Co. noted that the number of working age individuals with severe disabilities has increased 400% over the past 25 years.

"The kinds of things that killed us before, we now survive," said Herum, who confessed to NACUSO's Fall Leadership Conference attendees here that he personally went through the process of placing his parents in a care facility. Diseases like hypertension, heart disease, cerebral and vascular disease are now more likely to disable rather then kill. One-in-four persons will have an accident each year, and currently there are 21-million people aged 29 to 64 who are disabled, 5.1-million of whom need help with life's daily activities.

The enormous expense associated with caring for dependants will balloon as America's population of older citizens grows as a percentage of the total. The trend, said Herum, is to care for people in the home as much and for as long as possible. Real savings over institutionalized care are high, but with 64% of caregivers (overwhelmingly female) employed full time, the squeeze on family finances and quality of life issues such as leisure and vacation opportunities will be tough, he said.

Some 42% of costs are already borne out of pocket, according to Herum. "You all are in the business of helping members keep and grow their assets, and this will chain them." Medicare pays 6%; Medicaid 48%, private insurance 2% and the remaining 2% is paid by "other" sources.

So LTC is a Boomer product, not one to sell exclusively to the silver-haired set, he said. Herum suggested marketing to that segment by noting the overall value of buying it while young. "Pricing and underwriting is advantageous, and workplace options are growing as IRS regulations further encourage businesses to buy plans for key employees," said Herum. Such "sponsored" group discounts average 15%. Opportunities exist for CUs and CUSOs to market their SEG groups and other small businesses.

Mick Murray, manager of the Affinity Sales Group for Long Term Preferred Care, Inc., a subsidiary of Cendant Corp., the nation's largest independent marketer of LTC insurance had a question of his own. "Your members are buying LTC insurance. Why shouldn't they be buying it from you?"

Murray said he left banking and went into the insurance business some years ago after watching his father die from cancer at age 75. "Many of your members are now writing checks for $3,000 to $4,000 a month for parental care," he said.

The LTC risk projection for mature members of a typical CU with 15,000 total mature members aged 55 and over is that 11% will need care for at least one year. More than $81-million, or 37.2% of the total, is estimated to be paid out of pocket. "Much of this will come out of credit union accounts," said Murray, adding that that figure will be $215 million in 20 years.

Marketing to members age 50 and up with a direct mail piece that gets the usual 3% to 4% response may be expensive, but the CU needs to touch all the appropriate members, Murray suggested, adding it may generate later walk-in traffic. If a credit union supplies educational seminars, newsletter articles, branch displays, website stories and properly trained sales representatives, it greatly increases the growth of a program, he pointed out.

LTPC does that training for its CU partners, Murray said, bringing CU representatives to Nashville, Tenn., for a thorough two-day training session to license, appoint and train them in underwriting, carrier selection and sales. The fee is $500 "And the tuition is refundable if the rep writes $10,000 over three months, which should be easy to do."

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