About once a week, Carl Friedrich fields a call from a life insurance producer or advisor. They quiz him about a growing but still relatively obscure niche product that combines permanent life insurance with a long term care feature.
"Usually they ask me about the products that are available, which product is best in a certain situation, what company might be coming out with a new plan, those kinds of questions," says Friedrich, FSA, MAAA, a consulting actuary and principal at Milliman, Inc., where he helps insurance company clients develop these so-called "linked benefit" or "combination" life insurance-LTC products.
The inquiries about those products are coming much more frequently for Friedrich nowadays, which, he says, is an indication that interest in them is growing, spurred by favorable tax rules, a growing awareness of the product among agents and advisors, and swelling demand from clients who either are reluctant to pay for or cannot qualify for stand-alone long term care insurance.
Such a surge in demand represents an opportunity for insurance producers and advisors to create a new profit center for their practices, says Scott Boyd, CSA, LTCP, vice president of long term care at National Benefits Corp, an insurance marketing agency in West Des Moines, Iowa. But because of the nature of the product and the people for whom it's best suited--typically wealthier Boomers and seniors--this isn't the type of new business that just drops into one's lap, he explains. Instead, Boyd says, it's a "no pain, no gain" proposition, where to access opportunities in the burgeoning market for linked benefit products, advisors must first get educated about them. In most states, the education process entails completing a long term care certification course before they can sell any form of long term care insurance, including combination products.
Getting certified is worth the time and effort, asserts Boyd, pointing out that at National Benefits Corp., sales of linked benefit LI policies have "nearly tripled," while nationally, demand is "growing exponentially."
And the future looks promising, according to Michael Hamilton, assistant vice president and linked benefit product group leader at Lincoln Financial Group, whose MoneyGuard Reserve product is a stalwart in the market. "I think we're just starting to scratch the surface" with linked benefit products, he says. As of the third quarter 2009, year-to-date sales of MoneyGuard, a linked-benefit universal life policy with an LTCI rider, had hit a company high of $290.1 million, up 17 percent from the first three quarters of 2008.