Banks can be big sellers of long-term-care insurance, but because it is complicated and consumer awareness is not as high as for other products, it will take time for that potential to be realized, experts say.
"I believe banks will be responsible for a significant portion of long-term-care sales," said Jesse Slome, executive director of the American Association for Long Term Care Insurance, a group in Westlake, Calif. "They have access to the customers, they have the trust of the customers, and they have a financial relationship with the customers." 
Bank interest in the product is rising. In a 300-bank survey published in November by the Association of Banks-in-Insurance, 29% said they were selling long-term-care, 14% said they planned to start selling within one year, 10% within two years, and 13% were undecided. The remaining 34% said they were not planning to sell the product within two years.
Long-term-care insurance does not pay for hospital care but does pay for extended stays in nursing homes, at-home nurses, and other expenses connected with a lengthy ailment. Depending on the coverage selected, a policy can cost several thousand dollars a year- and premiums are higher for the elderly, said Gregory Vacca, first vice president of CalFed Investments, a unit of Golden State Bancorp of San Francisco.
Mr. Vacca said there is a market for this type of insurance, especially among baby boomers, and that he expects it to be a growth area for CalFed.
"Last year, the bank did over $5 million in revenue" from insurance, "and about a third of it was long-term care," he said. "I think it's a good product for banks that have the demographics - people 55-plus years old."
Selling long-term-care policies can help banks retain deposits, Mr. Vacca said. One reason CalFed started selling the product was that customers were cashing in certificates of deposit to pay for nursing home needs, he said. Nursing homes can cost about $50,000 a year, depending on location, according to the American Association of Retired Persons.
"It's a significant issue for people, and at a thrift you have a lot of depositors. You have a lot of senior customers," Mr. Vacca said. As his thrift tries to help its clients prepare for retirement, long-term care "becomes a very important insurance product in answering the needs of our customers," he said.
Mr. Slome said the product also offers an additional revenue stream for financial planners and insurance specialists in the bank, as well as opportunities to cross-sell to customers who already have their retirement savings there.
But Kenneth Kehrer, president of Kenneth Kehrer Associates in Princeton, N.J., warned that selling long-term care can be trying for banks.
The target customer - someone approaching retirement - "seems to be the same customer who buys annuities in droves through banks, and banks have thought of this as a logical cross-sell," he said.
However, it has not always been easy to sell the policies, because of cost and consumer denial. Spending the end of one's life in a nursing home is something "people tend not to think is going to happen to them," he said.
While a huge number of people who might need nursing home care someday can afford long-term-care premiums, the actual market for the policies is more limited. Only about $4 billion of long-term-care products are sold each year, according to Conning & Co., a research firm in Hartford, Conn.
However, sales of long-term-care policies have grown an average of 21% a year since 1987, and six million policies currently are in force, according to a report by the Health Insurance Association of America. Conning also predicts the annual premiums will reach $10 billion to $30 billion by 2010 and $75 billion to $100 billion by 2025.
Mr. Vacca said better awareness of the need for long-term-care insurance will help, and awareness has grown substantially in the six years his bank has been selling the product.
"It becomes a very important insurance product in terms of answering the needs of customers," he said. "I'm still very much of the mind that educated consumers buy - ignorant consumers you have to sell to."
Mr. Kehrer said the complexity of long-term-care insurance makes selling it expensive for banks. Since they do not sell it in huge quantities, "the economics of it are such that for a bank to be able to have enough specialists to cover its whole system may not be economically feasible," he said.
He said the banks tracked in his studies generally do not break out their long-term-care sales, but "the data suggests that very little is being sold by banks."
Mr. Kehrer also said he suspects that many banks do not report the figures because "the amount they sell is so low, they tend to prefer not to talk about it."
Banks that sell long-term-care insurance do so through several channels, including in-house financial planners and arrangements with outside specialists, he said.
Mr. Vacca said his thrift offers educational workshops to introduce the product to consumers, and has long-term-care specialists who support the investment reps who sell the products.
Mr. Kehrer said that other companies, such as FleetBoston Financial Corp., work with third parties to sell the insurance through their banks.
John Hancock Financial Services Inc. of Boston, a longtime presence in the long-term-care market, was one of the first companies to sell the product through banks. It recently added Wachovia Corp., First Union Corp., and Regions Bank to its long-term-care distribution list.
Arnold Garron, divisional vice president of John Hancock's financial institutions group, which handles the bank channel, said the company expects sales through banks to grow. "Folks are looking for banks to do more and more of this type of financial planning," and offering long-term-care products lets banks provide more services to their clients, he said.
The group's sales of long-term-care products in the first nine months of this year rose 17% from a year earlier, to $76.2 million.
Fran Senner-Hurley, general director of the group, said the insurance "protects the assets of the bank and of the consumer."
Other top long-term-care carriers include GE Capital, Penn Treaty, Conseco, Aegon, and CNA. Several of these, but not all, market their product through banks.
Mr. Slome said he recommends that banks work with specialists, from either inside or outside, when they begin selling the insurance.
"Considering all the barriers to entry - the complexity of the product, the lengthy sales process, the time it takes to meet and sell a consumer, the lag time in getting paid - considering the barriers to success, employing specialists who will dramatically improve the closure ratio" is a good idea, he said.
In addition, long-term-care products are relatively new, and unlike products such as life insurance, the long-term-care policies force consumers to make hard choices about specific benefits, not just monetary values, Mr. Slome said. For example, buyers need to decide where they want to be if they have to go into a nursing home, whether they would prefer at-home care even if the benefit is more expensive, and whether they want a private or shared room in a nursing home, he said.
"This is not just a financial sale - this is an emotional sale," Mr. Slome said. "You're making decisions today about how you want your life to be 15 years from now."
Ms. Senner-Hurley said the key to selling long-term care for banks "is getting your customers to talk about their personal experiences." Once customers see the problems faced by elderly people who need nursing care, they are more open to buying the policy, she said.
