Producers Reluctant To Switch Clients To Newer LTC Policies
Todays buyers of long term care insurance policies are enjoying many product features that were not available on policies sold even a few years ago. But theres a downside to that: Many clients have older policies with benefit limitations that newer policies often dont have.
For instance, many agents point out, some policies sold in the 1990s specify that a beneficiary must be confined to a hospital for a certain period before they will pay for nursing home care. Others have absolutely no provision for home health care. And many older policies lack inflation protection.
So, should a producer ever try to transfer a client to a newer policy with more valuable benefits?
The answer, almost always, is no, according to experts.
They point out that a new policy costs significantly more than an existing policy, even factoring in the enhanced benefits. If a client has not significantly improved his financial situation, then he is probably better off sticking with the old policy, as limited as it may be, they note.
William C. Gelberg, principal, William C. Gelberg Agency, Delray Beach, Fla., says he never considers switching a client unless the only other option is to drop the policy altogether because it is too costly. On such occasions, he may suggest that the client switch to a bare-bones policy that provides at least some coverage, even if it has fewer benefits than an existing policy.
That situation could arise, for instance, when a company significantly increases the cost to customers as has happened in Florida, Gelberg argues. “In that case, I might consider transferring them to a policy with fewer benefits but only if they are in good health and acceptable to another company.”
William Thrash, an agent with AXA Advisors Equitable in Anniston, Ala., calls the price-benefits quandary “one of those Catch-22 things” for LTC producers.
If he finds someone with an old nursing home contract, then Thrash says he compares its benefits with a richer policy, without actually making a recommendation. “If you do your comparison and youre open with the information, then their decision is, Do I keep the nursing home policy, or do I go to a policy thats more comprehensive?”