Help Lower The Average LTC Age: Offer LTC Riders

Does such a rider make sense if the client is a 40-year-old man who doesnt smoke? Is there a need for LTC at this age? Certainly! Younger people experience accidents, strokes, cancer and nearly every illness that can incapacitate seniors. But the real justification for the coverage is the low cost of the LTC rider approach.

Assume a sale of a $100,000 life policy to this 40-year-old. An LTC rider can be added for about $80 a year. This would provide a $2,000 per month benefit for four years. Of course, its not a full coverage LTC covering all of today’s nursing home costs, and it lacks inflation protection. But, at a low cost, this rider will help offset expenses of a catastrophic nature. (Note: The death benefit of the life policy reduces when LTC payments are made).

This rider coverage at least meets the need halfway. Its a beginning.

By contrast, a stand-alone quality LTC, with a $100 daily benefit for four years and including inflation protection, would cost the same 40-year-old some $700 to $800 per year. That might be a tough sale, when the typical young family is striving to handle its debt burden and the typical younger buyer is drawn to many other purchase temptations.

Producers can do much to solve the LTC problem by building these inexpensive riders into the plans for younger buyers.

Doing so helps prepare a foundation of LTC protection for the client, one that can be added to in future years. And such sales will contribute to bringing down the average age of LTC buyers, helping achieve pricing stability.

(Incidentally, adding LTC riders also has a very positive effect on persistency.)

To move in this direction, producers should avoid taking an “all or nothing” approach–i.e., presenting a first-class stand-alone LTC, complete with inflation protection and bells and whistles, but then walking away if the prospect balks. Instead, they can address client needs by presenting modified solutions such as LTC riders.

In fact, why not build LTC riders into every proposal? This differentiates the practice, improves the clients level of protection, increases persistency at the carrier, and results in greater agency income.

, FSA, MAAA, CLU, is president of Actuarial Strategies, Inc., Bloomfield, Conn. E-mail him at [email protected].

Reproduced from National Underwriter Life & Health/Financial Services Edition, September 10, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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