The LTC Agents Mission: Help Protect The Wealth Of America

Long term care insurance is absolutely essential to asset and retirement income protection. This is a key lesson I have learned from my 15-plus years in the business. Indeed, it is central to the LTC agents mission.

The leveraged dollars guaranteed for future delivery help preserve the clients dignity; save family and friends who might otherwise be caregivers from disrupted lives and futures; provide assurance that retirement income wont be depleted for the non-disabled spouse; and guarantee wealth transfer for future generations.

Whats more, LTC insurance is good for America.

A 2002 report by the Senate Special Committee on Aging quantifies the facts. Without a reliable third-party payer for LTC services, the cost will hamstring the ability of America to defend its citizens. The Senate reports:

“Government projections developed for the U.S. Department of Health & Human Services find that annual expenditures for long-term care will reach $207 billion in 2020 and could nearly quadruple in constant dollars to $379 billion by 2050. Absent reform, spending on Social Security, Medicare and Medicaid would consume nearly three-quarters of federal revenue by 2030. This will leave little room for federal priorities such as defense and education. By 2050, total federal revenue would be insufficient to fund spending for Medicare, Medicaid and Social Security interest payments.”

Now, consider Medicaid. Though developed to be a social safety net for the truly needy, Medicaid has become the payer of choice for the LTC expenses of many middle class Americans. These are people who either didnt know or werent told about the value of private LTC insurance. To qualify, many fellow citizens are forced to impoverish themselves or shift and shield assets.

What choices do we want our children to have to make? Do we want them to rely on substandard government subsidized LTC options for us? How do we want to live the balance of our lives? Should this country have to make a choice between caring for the truly needy and protecting itself from threats at home and abroad?

Family caregivers often take the brunt of the LTC event. Senate testimony reveals that family members provide 80% of LTC in America. They report that if these unpaid family members were replaced by paid home care providers, the cost would be nearly $200 billion dollars annually. The 1997 MetLife Study of Employer Costs estimates that a “career” of caregiving costs an average of $656,000 in lost wages, pensions and Social Security.

Describing the benefit-to-cost relationship between the LTC insurance premium and the policy benefits is the key to success. Here is a significant real-life example involving a 59-year-old male client of one of my brokers:

The 2002 MetLife Mature Market survey indicates that the average cost of care for the clients geographic area is approaching $73,000 annually. If he has his first claim at age 81, his inflation-adjusted cost will be $203,000 (5% compound inflation). The cost of a five-year claim could be over $1.1 million. If you factor in conservative asset liquidation costs and loss of investment income, the five-year claim exceeds $1.5 million!

The broker proposed a rich benefit package: $200 per day, 5% compound inflation protection, comprehensive lifetime benefits, 30-day elimination period, and 10-pay annual premium of $6,000. The premium is tax deductible because the client has a C-corporation. The tax-adjusted cost over 10 years (assuming a 40% tax savings), including a time value of money factor, is just under $80,000. The benefit-to-cost relationship for this client is less than seven to one! This is assuming only a five-year claim. If this turns out to be the typical Alzheimers case, the claim could last 10 years or more.

Your first step on the path to LTC insurance sales success is to purchase a policy on yourself and your spouse. You cant effectively sell an insurance product without owning it. Next you must understand the economic impact of the LTC event; doing this makes LTC insurance sale a no-brainer for you and your clients.

Traditional life and health insurance agents should be on a mission: to protect their clients and their families from the ravages of the likely LTC event. Funding the anticipated LTC exposure of our nation over the next 50 to 75 years with private LTC insurance will keep consumers, their families and America solvent. This is a serious matter; private LTC insurance is good for consumers, good for you and good for America!

Barry J. Fisher, CSA, CEO of Barry J. Fisher Insurance Marketing Inc., and a LTC insurance brokerage general agency in Woodland Hills, Calif., is president of American Association for Long-Term Care Insurance and immediate past president of California Association of Health Underwriters. His e-mail is: barry@bjfim.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, January 20, 2003. Copyright 2003 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.