With so much going on in recent years, you can’t blame health insurance advisors for focusing primarily on major medical health-care policies.
At first glance, the benefits of selling long-term policies far outweigh the short-term temporary market.
Agents are accustomed to meeting the needs of clients interested in longer-term policies.
Major medical policies give an insurer an established base on which to support their claims, underwriting and administrative staff.
These plans typically generate higher premium and last for longer periods of time, creating a longer-term return on advertising and sales investment.
These are attractive advantages, but they lead some advisors to overlook smaller sectors in markets where short-term medical policies can be a better fit for their clients. These market sectors should not be ignored for a number of reasons.
Brokering Short-Term Medical for Small Business
Put yourself in this scenario: you are an insurance advisor for the owner of a small business. You have assisted with the selection of an excellent major medical insurance plan for your client’s full-time employees. Your client also has several part-time and temporary employees who need coverage. Placing all of them on long-term plans may not be feasible, so a more affordable option is needed. Without short-term options, you would be unlikely to assist your client, which may create the opportunity for another broker who does have solutions to renew the entire account through a single source.
Many agencies have mentioned this particular replacement scenario to me and how it has accounted for significant business growth. This may be the single most important reason an insurance advisor should not overlook the options of short-term medical policies. You cannot allow a large block of business to be taken away because another agency offers a more flexible servicing opportunity. Given the simplicity of the short-term medical options available today, why not become the one who nets those new full-term clients?
The Expanding Number of Markets
Of course, you may not believe there are enough markets that find short-term medical appealing enough to make the effort worthwhile. Actually, those markets are plentiful and they are growing.
There always will be people shopping for and applying for permanent coverage. While these people are hunting for coverage, they will be uninsured. They are an obvious choice for short-term medical. In addition, if they are satisfied with your temporary coverage, they may well be satisfied with your long-term coverage as well.
As someone begins a new job, there is often a waiting period before benefits begin. This means he may be without insurance for a period of time, and is a perfect candidate for temporary insurance. Depending on the position level of your client, you may even have an opportunity at providing insurance to the entire business. Keep it as an option. We are still living in a down economy, and many people are without jobs. As these people are transitioning, they will be in need of coverage that will carry them until they find a new position.
The Affordable Care Act allows many young people to stay on their parents’ plan for an extended period of time, but once that time frame expires, those young people will need an insurance option. As they shop around or look for a job with benefits, short-term insurance can be a viable option.
For many people who no longer have a plan through their employer, they often think their only option is COBRA, which allows you to keep your major medical policy that you have had through an employer. However, after you retire or leave that employer, you are then responsible for up to 102 percent of the cost of coverage. This is likely not a cheap option for many out of work. If someone is looking for an affordable alternative to COBRA, then temporary coverage may be the right choice.
One of the largest markets for temporary coverage right now is college students and recent graduates. An unprecedented number of college graduates age 20-24 are turning to unpaid internships to enter the job market due to a 13.2 percent unemployment rate for their age group. Staying on their parents’ plans after leaving home for college can be a terribly expensive alternative and parents may not be willing to foot the bill. Instead, they can use short-term coverage until they have a more permanent option.
As mentioned above, part-time and temporary workers are both an option. Many times, these kinds of positions do not include benefits. According to the Bureau of Labor Statistics, 67 percent of the reported job gains as recent as September came from workers forced to take part-time employment opportunities for “economic reasons.” An employer may refer their part-time help to short-term health insurance options. This is a simple deal for brokers and that deal can eventually lead to more business from the client if the relationship is properly nurtured.
If someone retires early, his carryover benefits may not include insurance. However, until that person is 65, he is still ineligible for Medicare. A temporary insurance plan can allow individuals to maintain coverage without taking a reduction in benefits until they are finally eligible for Medicare.
People are coming to the United States every day. Once a foreign national obtains an immigrant visa, he may not immediately find a job. In addition, under health care reform, a five-year waiting period exists before a legal resident may obtain Medicaid or Medicare coverage. With a 22 percent growth in the number of issued immigrant visas since 2002, this is an ever-growing market.
The possibilities of those who need temporary health insurance are vast. As the economy fluctuates and the job market sways, there will be people in and out of work, in between jobs and starting new jobs, and all of them may need temporary coverage.
The affordability of short-term coverage should not be understated: as people hunt for the right plan, they may look to the most affordable option to get them by while they decide on a permanent option. Whether people are coming to America for the first time or returning after expatriating, they may need good coverage until they qualify for something more stable.
Look at every person to whom you supply a short-term option as an opportunity. You may very well be able to turn those short-term options into long-term gains.