The long term care insurance marketplace is a work in progress–and so is the product.
The changes can make an advisor wonder, who is the ideal prospect in this environment? Well look at that here, but first lets review the climate in which this decision is being made.
Some major carrier re-alignments have been occurring. For example:
A market leader has acquired another leading carrier.
A corporation has renamed its insurance subsidiary and now plans to do an initial public offering on it.
A leading LTC carrier is under pressure from state regulators to increase its statutory reserves.
A leading carrier has ceased selling new policies but continues servicing in-force business.
A foreign insurer has acquired an American carrier active in the LTC market, and a foreign conglomerate has acquired another LTC carrier.
Meanwhile, consumers are trying to sort out the mixed messages they have been receiving about LTC insurancethat is, “you need this insurance but it is very expensive, so Buyer Beware.” Some buyers get the message that the LTC story is a double-edged sword. On the one side is need and hope for a solution. On the other, confusion and misinformation.
What is an LTC insurance agent to do? My view is the LTC glass is half full. That is, the industry does have its challenges, but its future appears bright. Here is why:
For one thing, there is no viable LTC funding alternative in sight for the 76 million baby boomers who are approaching their retirement years. Budget deficits make new social insurance financially impossible. Medicaid is in deep financial trouble.
This suggests that consumer awareness has no place to go but up. Eventually, I believe the federal legislation, now pending in Congress, will provide favorable tax treatment for the LTC premiums paid by individuals. Perhaps it will even provide an above-the-line credit.
In the meantime, the LTC insurance specialist must address the marketand issues–at hand. Namely, who is the LTC insurance prospect in this market of mixed messages and future clarity? Who buys? Who should buy? Who should not buy? Who should self-insure? And, should all buyers buy the same level of benefits in a one-size-fits-all approach?