Dulberg says your supervisory procedures must include definitive information. Make a list of everyone involved in the insurance program, whether they are licensed or unlicensed.

“Who reports to who?” Dulberg asked. “Who supervises what? And to what extent? And you have to keep informed about the recent regulatory updates, changes in compliance and legal requirements by the FFIEC [Federal Financial Institutions Examination Council], the state insurance de- partments, all the original interagency statements, subse- quent advisories, all recent rulings, and more. Please do not let similarities between the states cloud the fact that every state is different. You just cannot have a generic approach. Very, very often I give a presentation specifically on insur- ance licensing, and it’s absolutely impossible to speak about specifics unless I review each state.”

There are also other things that a state or federal regulator will be interested in. For example, they might examine your compliance training.

“Please,” Dulberg entreated, “train your nonlicensed individu- als in compliance! You have everything all set up for your insurance agents: compliance, sales training, product training. But you should train the people who are participants, but don’t necessarily have licenses or sell according to the rules and regulations.”

And be careful about marketing and advertising material. “All marketing, advertising, and sales material should be

reviewed,” Dulberg advised, “especially after what I occasion- ally see there on the Internet, from our clients who send us information. Some of those really makes the hairs stand up on the back of your neck.”

Dulberg advised bankers to have someone review their suitability standards for client profiling. But make sure it’s done

by an insurance-savvy individual. “I have the utmost respect for my friends at the NASD

[National Association of Securities Dealers],” Dulberg explained. “They may know half of a variable annuity, because it happens to be in a mutual fund, or a separate account. But they do not necessarily understand the insurance implications.”

In addition, every bank agency should draw up an insurance compliance and procedures manual. “If you don’t have one, get one,” Dulberg urged. “Get one, build one, or have one built for you.”

Theproblem of nonresident sales can also trip you up.

Handling complaints Finally, keep a constant eye on complaint handling and

resolution. “This is extremely important,” Dulberg cautioned. “All

complaints are. They act as a barometer. And it measures what is wrong or right with your agency. Keep in mind that a complaint is liable to come in from anybody. It will go into the OCC [Office of the Comptroller of the Currency], into the federal bank regulators, into a state insurance department. It can go into a third-party marketer. But it will ultimately wind up on your desk. Make sure that in your contracts, when you deal with these people, that you get a copy of everything. You must be aware of what’s going on. Take the statistics-see what’s going on. And use all this complaint information to find out what is right and what is wrong with the program.” W

+++

THE SECRET TO SELLING LONG-TERM CARE s there a secret to selling long-term care insurance? I Phyllis Shelton, who runs Long-term Care (LTC) Consult-

ants (Nashville, Tennessee), believes there is.

A formula for success “I’m going to give you a formula,” Shelton said, at a recent

convention of the Association of Banks-In-Insurance (Washing- ton, D.C.). “And it’s what 1 found out in the trenches, myself. I think that 20 percent of the sale is about product. And product is important. One of the hardest things that I do is a comparison of 30 companies, and all these policies. Product is very important. You’ve got to have a fine product.

“But that’s only 20 percent of sale,” she continued. “People don’t care what kinds of long-term care product you have, as long as they don’t need it! So it’s the other 80 percent that you cannot be successful without. And I’ll give you an analogy with real estate. What do they tell you the three most important things are for success in real estate? Location, location, location. And the three most important things for success in long-term care insur- ance sales are education, education, education. That’s true whether you’re talking to Mr. and Mrs. Jones, or a benefit manager with 5,000 employees-or it may be an accountant, or sometimes, believe it or not, an attorney. Sometimes you will have to educate trust officers, believe it or not.”

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So most of the sale involves educating the customer. “If you can’t go through that 80 percent you don’t have a sale

on long-term care insurance,” Shelton affirmed. “Now, my personal sales presentation takes anywhere from 25 minutes to 45 minutes, based on how much people talk back. And it’s always good when they talk back. Otherwise, they’re probably dead, or in a coma or something, and you don’t have a prospect anyway. But I have boiled down this to what I call a 2’/, minute ‘micro presentation’-which is a wonderful thing to teach to your platform employees. Because you want to get lots of referrals, just from your own staff. You have to establish a culture in your bank so that people understand, in your bank, that this is some- thing that every American needs.”

You can do it. And it’s not hard. “It’s an easy thing to teach,” Shelton advised. “It’s also doable

on the telephone, when you’re into telephone sales. I’ve consulted with a bank about that. And the seminar that you do for your customers just goes into each of these points, but in more detail.

So would you like to hear that 2’/ , minute presentation?” Of course, everyone did. So Shelton walked us through it,

with First Chicago NBD Corporation’s Ron Braun playing the role of the customer.

In real estate, the three most important things are location, location, location. And in long term care insurance, they are education, education, education.

Educating the customer

bank today ?” “Ron,” Shelton asked, “why did you come into the

“To renew my CD,” said Braun. “That’s a good reason,” said Shelton. “How are you doing

today? It’s so great to see you! How’s everything on the home front? I want to talk to you for just a couple of minutes, because the bank has really gotten into long-term care insurance. And now that we’ve learned about it, we’ve decided that it’s so important that we are educating all of our customers about it. And if you can spare me just 2’/ , minutes, I can hit the highlights with you. Then you can talk to your family. And if you’re interested, you can come back and we’ll put together some numbers for you. Can you give me that long?’

The customer said yes. “The most important thing I want to communicate to you

today,” Shelton began, “is that long-term care is really the greatest threat to the financial security of most of us-unless we plan ahead. And that’s why we’re having that conversation. Now, Ron, what do you think of when you hear the words, ‘long-term care?’ What just goes through your brain?”

“Nursing homes,” Braun replied. “That’s very typical, and I hear that all the time,” Shelton

answered. “Would it surprise you to know, Ron, that less than 15 percent of long-term care is in a nursing home?’

“Yes,” Braun agreed. “That’s true,” Shelton affirmed. “The other 85 percent is

mostly at home, where most of us would rather be. And it includes these gorgeous assisted living places that you see around town, and adult day care. So less than 15 percent is actually in a nursing home. The second biggest misconception about this issue, Ron, is that it hits older folks. But 40 percent of the people who need it are working age adults-1 8 to 64-most of them not in nursing homes. They’re home with their families for years and years. And it’s things like what happened to Christopher Reeve, with his terrible accident; or Mohammed Ali, with Parkinson’s Disease, who is 54 years old. It also happens with alot of accidents-more so auto accidents with brain injuries. Or things like multiple sclerosis-hitting people in their 40s with no warnings. Or aneurysms, brain tumors. And a shocking number to me, Ron, was that a third of the people in this country who have a stroke every year are under 65 years old. Does that surprise you?’

“Yes,” Braun conceded.

Revealing the risks “Yes,” Shelton echoed. “I just was so shocked. Well, not

only do younger people need it, but I want to make sure that you understand just how much financial exposure you have on it. So I want to let you know that one year of long-term care in our area-whether it’s for daily eight or ten hour shifts at home or semi-private nursing home care, will run you around $50,000. And that is tripling, Ron, in the next 20 years! So, now think about it-if you or both you or your wife need it or, heaven forbid, if one of you gets something like Alzheimer’s-the lifespan is any- where from three to 20 years, but the average is at least eight. Can you see what terrible financial exposure you have? It’s huge.

“Well, most people are surprised to learn that long-term care is mostly paid out of personal savings assets,” she continued, “or through the government welfare program called Medicaid. And the reason for that is that private health insurance doesn’t cover it. Disability income is there to replace your income. It doesn’t give you another $4,000 a month to pay for long-term care. Medicare doesn’t cover it. And the only time this Medicaid program covers it is after you have exhausted your resources. So you actually have to be down to about $2,000 in assets. And then, the most your spouse at home can keep is just a little over $80,000 in assets. So you have to spend down to that. Plus, there’s increasing legislation-and you may have heard something about this-to make it illegal to just give your assets away so you can get on this Medicaid program.”

By now, you’ll have grabbed the customer’s interest. “Now,” Shelton said, “I want you to know how high the odds

are that you or your wife, or both of you will need this: it’s greater

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than 50 percent that you will need some type of long-term care. It probably won’t be a nursing home. Most people will never be in a nursing home. But home health care can cost you just as much, or more, depending on how much you have. So odds are very high.”

Shelton then put those abstract figures into concrete terms that anyone can understand.

“Think about it this way,” she suggested. “What if you looked out your bedroom window last night and you saw one out of two houses on fire. You’d stop and think for a minute, ‘I hope my homeowner’s policy’s okay!’ Or if you drove in here today, and one out of two cars were having wrecks out on the highway, you’d stop and think for a minute, and hope that your car insurance is in place, yes?

“Well, house fires and car wrecks, we know, don’t happen in one out of two odds. But none of us can sleep without that insurance. We don’t cancel our homeowners policy just because our mortgage is paid off. So basically, what we’re talking about here, is something that’s very expensive. And it’s very likely to happen to one or both of you. And it’s not paid by anything else- until you have exhausted most of your resources. So can you think of any reason why you would not want to protect your family from this huge risk?’

“No,” Braun replied. “Okay,” said Shelton, winding up. “What’s your wife’s

name? Laura? Can you get Laura in here next week, and maybe we can look at some numbers, and I’ll just give you some proposals?”

Most people are surprised to learn that long-term care is mostly paid out of personal savings assets. Private health insurance won’t cover it.

The opportunity for banks “Okay,” Shelton asked her audience, when she finished the

quick presentation, “how hard was that? Those were the main points. Now, let me wrap up. That same message that I did for him is the long-term care story. That is the story, and that is the message. Now, as banks, you have a wonderful opportunity to get that message out-not just to your customers, but what’s going to happen is that this message is going to spread throughout your community. And it will go to people who are not your customers, who will ultimately become your customers-because this gets them into your bank.”

There are many things banks can do to promote sales of long- term care insurance.

“So I tried to sit down and make alist of all the things that I’ve learned from my consulting experience with banks as to how you

can get this message out,” said Shelton. “Well, the first thing, of course, is that you could do seminars. And I think they don’t start with your customers. I think those seminars start with your internal people: your investment analysts, your trust officers, and your platform employees. Because you’ve got to educate, inter- nally, these people who are going to be talking to your customers day in and day out.

“And if you do seminars, I recommend you do regularly scheduled seminars-not just one sporadically. Because the word needs to get out that you’re doing a seminar on long-term care the third Thursday of each month, or whatever. Have a schedule, over the next four, five, or six months-a regularly run seminar. Then, you can do direct mail.”

But don’t do direct mail the way everyone else does. “If you do direct mail,” Shelton advised, “I suggest that you

put in something extra. Everybody does direct mail. But you could put in a six- or seven-minute audio tape, just to educate people with those main points that I just went over, so that they know this is something important. That’s something different you can give them. And most people will listen to a tape.

“You can have a kiosk,” she continued. “You can have ‘Take One’ brochures in the lobby. You could have a video playing continuously in your lobby. You can have articles in the customer newsletters. And you can certainly put it on your Web page. I know that some of you have, in your statements, a promotional page that goes in front of your checking account statement, or your savings, or your investment re- port, or whatever.”

Grabbing attention Shelton gave some more tips. “Youcouldlistjustquestions,” sheoffered, “tograb people’s

attention: ‘Did you know that 40 percent of the people needing long-term care are working age adults, age 18 to 64? Did you know that we offer long-term care insurance that can help you take care of your parents without changing your lifestyle?’ Just include eye catchers like that, so when people open their state- ments, that’s what they see.

“You could even put the information in screen savers on your employees’ computers,” Shelton went on, “just some- thing to keep the idea in front of them that you’re offering it. You can have a telephone bank, to either answer questions and set up appointments-if you’re using face-to-face sell- ing-or to actually sell the product over the telephone. It’s very powerful.”

And it provides some added value for your customers. “You can give away things if you do get appointments,”

Shelton suggested. “For example, if you’re doing direct mail and people say, ‘Yes, I want to come in and talk to you,’ give away a consumer manual, or give away a videotape. But just offer extra things. Because isn’t it the value-added things that really get you the customers you have?”

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