RESEARCH: WHAT WE SEE AND HOW WE USE IT

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RESEARCHWHAT WE SEE ANDHOW WE USE IT

• Session 27 February 28, 2006
• Session Producer
• Mark Gerety, Vice-President
• Strategic Planning
• Genworth Financial

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PANEL

• Jessica Miller, Director of Analytic Services,
  LifePlans, Inc.
• Jennifer Douglas, Project Director, LTCI Sales
  Surveys, LIMRA
• Jeremy Pincus, Principal Director The Forbes
  Consulting Group, Inc.

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Research What We See and How to Use It

• Findings from an ASPE/RWJ sponsored study of a
  LTC Admissions Cohort

Presented by Jessica S Miller LifePlans,
Inc. February 28, 2006
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Purpose of Study

• Obtain a comprehensive profile of individuals
  with private LTC insurance policies at the time
  they file a claim for LTC services.
• Understand the factors involved in the decision
  about how and why to use services in particular
  care settings.
• To understand how and why people transition
  between care settings throughout their course of
  disability.
• To assess the role of care management in the
  process.

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Participating Companies

• Aetna
• AEGON Companies
• Bankers Life Casualty
• Conseco Senior Health
• Genworth Financial
• John Hancock
• MedAmerica Companies
• Prudential
• Penn Treaty
• UnumProvident

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Sample Inclusion Criteria

• Individual must have policy that covers nursing
  home, assisted living and home care.
• Integrated nursing home and home care
• Nursing home and home care policy
• Nursing home with home care rider
• Home care with nursing home rider
• Must be evidence that some level of formal care
  is imminent or already being used.

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Sampling Basis

• First interview as close to initial service-use
  as is possible.
• At request for claim kit.
• At first submission of bill.
• At first notification that a claim is
  forthcoming.
• Random sample from all insurance companies until
  sampling objective is met.

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Longitudinal Approach to Data Collection

• Up-front in-person assessments to establish
  baseline.
• Ongoing telephonic interviews at roughly
  four-month intervals.
• Follow individuals for a period of at least 32
  months.
• In total, 8 interviews over the period
• (1 in-person and 7 telephone).

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Project Update

• Fieldwork began May of 2003
• Roughly 1500 in-person interviews completed by
  2005
• Completed 2nd wave of telephone interviews
• Anticipated completion date for telephone
  interviews is June 2007
• Response rates in the 85-90 range

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Discussion

• Results to be discussed in this session include
• Demographics
• Cognitive and Functional profile
• Decision making process
• Motivations for using paid care

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Where are people choosing to enter the service
system?
Total Sample of Baseline Interviews 1474
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Demographics
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Living Arrangements of Policyholders in the
Community
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Functional Disability
Average ADL limitations HC-3.1 NH-4.3
ALF-2.5 PNRPC-2.4
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Cognitive Functioning
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Unpaid Care
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Most Important Factor Related to Choosing Care
Location
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Is Current Care Setting First Choice?
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Factor that had the Most Influence on Specific
Caregiver/Facility
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Other Care Settings Considered
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Most Common Motivations for Beginning to Use Paid
Care

• Needing more help/not being able to manage on own
  was most common reason for seeking paid care
  across all service settings
• Needing help after an acute incident or an event
  was the second most common reason given

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Conclusions

• High preponderance of ALF users
• Policyholders who are receiving paid care at home
  report higher income levels
• Having someone available when needed seems to be
  the most important factor when choosing a care
  setting
• Not being able to manage anymore is most common
  motivator for the onset of paid care

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Research What We Seeand How to Use It

• Jennifer Douglas
• LTCI ResearchLIMRA International

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Long-Term Care Insurance Sales

• 2005 Individual and Group Results
• Whos buying LTCI?
• What are they buying?
• Where are they buying?

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Segmentation and Target Marketing for Increasing
LTC Sales

• By Jeremy Pincus, Principal,
• Forbes Consulting Group

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Questions

• What is segmentation?
• Are there different LTCi segments?
• How many segments are there?
• How big are the segments?
• What makes the segments unique?
• How can segmentation be used to improve sales
  production?

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What is Segmentation?
Price-elastic Specialty products

• Segmentation identifies groups of individuals
  that are maximally similar to one another within
  each group and maximally different between groups
  along dimensions that are relevant to marketing

• Segmentation grouping
• Represents midpoint between mass marketing of
  the past and one-to-one marketing of the future

Price-inelastic Commodity products
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Are there different LTCi buyer segments?

• Are buyers all the same? No
• Are there consumer groups that share common
  profiles? Yes

• Demographics
• Lifestyles
• Attitudes Values
• Media usage

• Messaging hot buttons
• Product Needs/ Preferences
• Price sensitivity
• Sales channel preferences

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Study Sponsors
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Consumer Survey Sample

• 2,732 respondents recruited from the TNS/NFO
  Worldwide Interactive Panel of 3.6 million
  individuals completed the LTC questionnaire
• This large sample supported the need to conduct
  detailed analysis of sub-samples (i.e., 12
  segments)

Target Market
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Questionnaire 360o View of Consumer
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Four Basic Segment Types
Planners
Non-Planners
Family- oriented
Motivated to protect family from burden of LTC
Family should take care of their own
Fear of strangers in home
Feel personally responsible for LTC planning
Rather die than live in NH
Interest triggered by family LTC experience
Passive approach to LTCI
Seek to preserve assets


Self- oriented
Unconcerned w/ burdening family or personal
well-being
Comfort
Independence/Control
Denial/Cannot accept aging
Price Insensitive
Undifferentiated low-interest in LTCI
Minimal LTC Experience
Choice of Caregiver
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Half of the target population represents good
prospects

• Self-Oriented Planners
• Need Driven, Mastery Seeking
• 13.9 million Americans

• Self-Oriented Non-Planners Unmotivated, Free
  Spirits
• 12.8 million Americans

High Involvement
Low Involvement

• Family-Oriented Planners
• Attitude Driven, Mastery Seeking
• 14.3 million Americans

• Family-Oriented Non-PlannersFear Driven,
  Planning Challenged
• 14.0 million Americans

Same distribution for Multi-Life/Group (40-59)
Assumptions As of July 1, 2003 there were 110m
Americans age 40-74 55m earn above median income
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Spikes in Purchase Interest Occur at Different
Lifestages
Each segment type ripens at a different age
Orientation
50-59
60-74
40-49
Family
Confident Couples
Comfortable Realists
Family-Centric
Planners
Self
Diligent Preservers
Independence Driven
Self-Directed Singles
Family
Fear for Family
Passive Burdened
Head in the Sand
Non-Planners
Self
Value-Seeking
Fading Denial
Live for Now
and develops new ways of thinking about LTC as
they age
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Family-Oriented Planners Attitude-Driven,
Mastery Seeking

• The Family-Oriented Planner Story
• Jim is a married business executive in his
  mid-50s who plans to retire early.
• Jims very confident that he has done a good job
  of preparing for retirement and he often gives
  advice to his friends and co-workers about
  planning.
• His interest in LTC insurance was triggered by
  his mothers need for LTC, which he helped
  provide in her home until she had to move to a
  nursing home.
• He wants to protect his family from the burden of
  having to care for him hes more concerned about
  protecting his family than protecting himself.
• Hes interested in buying LTC insurance, but
  doesnt know exactly what he needs or if this is
  the right time to buy.

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Self-Oriented PlannersNeed Driven, Mastery
Seeking

• The Self-Oriented Planner Story
• Karen is a divorced professional in her late 50s
  who lives in a large city. She plans to retire in
  her early 60s.
• Karen is interested in LTC insurance as a means
  to put her in charge of all decisions about her
  own care, particularly the choice of caregiver.
• She is willing to spend a lot on a good policy
  and has compared several policies
• She feels personally responsible for LTC planning
  and believes that she cannot rely on her family
  or friends to provide it. Her interest in LTC
  insurance arose during the retirement planning
  process.
• Living well is important to her, and she expects
  to receive high quality care in her home for as
  long as possible.
• Even though she hasnt yet purchased LTC
  insurance, she fully intends to buy it soon.

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Family-Oriented Non-PlannersFear-Driven,
Planning Challenged

• The Family-Oriented Non-Planner Story
• Laura is in her early-50s, married with two
  teenagers at home. She works for a large
  manufacturer and gets all her insurance at work.
• She does not believe in long-term planning
  because she believes that things will either work
  out or they wont.
• Laura regularly sacrifices for her family, and
  believes that families should care for their
  own accordingly, she expects her family to take
  care of her LTC needs.
• She is not comfortable with strangers coming into
  her home to care for her she finds the idea of
  nursing homes similarly unacceptable
• Although she is not worried about her personal
  comfort, independence, or quality of care, she
  does worry about becoming a burden to her family.
• She finds LTC insurance to be expensive and
  confusing.

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Self-Oriented Non-PlannersUnmotivated Free
Spirits

• The Self-Oriented Non-Planner Story
• Paul is married with teenagers, in his mid-50s,
  and is a well-paid technician. Hes a bit of a
  Peter Pan refusing to accept his own aging,
  going to bars, and playing sports.
• Paul is not a planner, hes more of a gambler.
  Hes not worried about becoming a burden to his
  family he figures thats why people have
  families.
• Paul doesnt trust insurance companies. Hes
  heard that some carriers have left the business
  and he thinks that the rest might not be around
  to pay claims in the future.
• He looks to objective, personal sources he feels
  he can trust for advice.
• He doesnt trust statistics provided by insurance
  companies.
• Paul feels that the government should provide
  LTC, and that his health plan or family probably
  will.
• Paul is not actively looking for a LTC plan, but
  would be receptive if someone he trusted told him
  it was a no brainer.

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With over 500 Marketing Mix combinations (4 x 8
x 4 x 4),what combination should you lead with?

• Message themes

Product design
Target Premium
Communication sales channels
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Selling to Motivations and Emotions
Planners
Non-Planners
Family- oriented
Superego
Anxiety
Guilt
Fear


Self- oriented
Id
Ego
Pleasure/Denial
Control
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A Simplified Guide to Segment Marketing
Superego

• Goal Protect family
• Message Analytical approach (risk statistics,
  cost, cost of waiting)
• Plan design Core product, shared care, spousal
  discount

Family-Oriented Planners
Ego
Goal Personal control and comfort Message
Spreadsheet price/features, LTCi vs.
investing Plan design Promote ABI, indemnity,
choice
Self-Oriented Planners
Anxiety
Goal Avoid being a burden while avoiding
NH Message Emotional themes, emphasize value and
peace of mind Plan design Focus on staying near
family (vs. Medicaid facility only, short LMB)
and informal care benefits
Family-Oriented Non-Planners
Id
Goal Preserve lifestyle Lets you choose the
prettiest nurse with the nicest hands Message
Youd be dumb not to buy this stories not
statistics Plan design Simplicity above all
Self-Oriented Non-Planners
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Key Marketing Implications for Distribution
Channels

• Strong preference for worksite presentation
• Follow with private interview with both spouses
• Use web and email messaging

Family-Oriented Planners
Unimpressed by employer-sponsorship as a reason
to buy Very likely to shop individual agents for
comparison Will consult financial advisor
Self-Oriented Planners
Strong need for basic LTC education Focus on
preserving nest egg Home mailing Emphasize
deadline or forced choice
Family-Oriented Non-Planners
Emphasize guaranteed issue or simplified
issue Worksite presentation followed by
one-on-one meeting Emphasize local community
presence, offer references
Self-Oriented Non-Planners
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Price Sensitivity Depends on Segment
Family/Planners are least price sensitive at
lower prices
Demand ( of respondents whose range includes
price point)
Self/Planners are least price sensitive at higher
prices
Self/Non-Planners are most price sensitive
Monthly Price Points (in )
Note These results are for a specific age band
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If we knew the segment composition of a group
ahead of time

• We would know if we should write this group at
  all (prospect qualification)
• We could select bundled A, B, C plan designs
  that align with the primary buying segments plan
  design hot buttons and key pricing thresholds
• We could tailor our group presentation to the
  needs, hopes, and fears of the dominant segment
• We would dial-up or dial-down our reliance on
  different communication channels (self-service
  vs. advisory)
• We would dial-up or dial-down our emphasis of the
  employer, the carrier brand, or the local
  relationship with the producer

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Segment Classification

• Sales process is made more effective when
  prospects are classified into segments before
  product is presented
• 5 intake questions re family support
  network, financial condition, specific goals (for
  agents, call centers)
• Available data, such as employee census data and
  U.S. Census information linked to home addresses
  (for group, multi-life, association)

Intake questions

Geodemographic codes
OR
Employee census files
Classify individuals into segments
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Key Takeaways

• There is no optimal one size fits all approach
  to marketing LTCi
• Motivational differences are key to understanding
  segment behavior
• Plan design preferences are linked to specific
  concerns
• Price sensitivity reflects immediacy of need
• Channel behavior is driven by salience of
  purchase decision (high vs. low involvement)
• Being able to pre-identify segments before
  enrolling employer groups or associations allows
  you to optimize and target the marketing mix