Put LTCI on a pedestal

There are 7 million Americans with long term care insurance. Eighty-nine percent of people between the ages of 45 and 64, and 77 percent of people over the age of 65, are uninsured for long term care. But statistics show that two out of every five Americans will need some form of LTC.

The arrival of 2006 brought an onslaught of baby boomers turning 60. How can advisors urge these new seniors to protect their assets and their families with an LTCI policy?

Decline in sales
Over the years, LTCI has garnered more media attention, partially due to celebrities’ misfortune. Former President Ronald Reagan suffered from Alzheimer’s disease. Michael J. Fox was diagnosed with Parkinson’s disease at age 30. It’s well-known that people are retiring earlier and living longer – often with long-term illnesses. With all of these factors, selling LTCI should seem easy. But sales have slipped.

Experts attribute the decline in sales to a number of factors:

• Constant changes in policy limitations and underwriting. Benefits are usually described in terms of the amount the carrier will pay a nursing home, and they range from $75 to $250 a day. Most carriers do not pay for mental disease and nervous disorders, other than Alzheimer’s; addictions to drugs and alcohol; injuries and illnesses caused by war; treatment paid by the government; and injuries that are self-inflicted, such as suicide attempts.

  It is imperative to stay up to date on the changes in coverage and increasing restrictions in underwriting, as many older clients may be denied coverage or put into more expensive categories. The earlier they apply, the better their chances of being covered.

• Lack of public education. As previously mentioned, LTCI can be difficult to understand. Many clients are unaware of the potential financial devastation they could face without a policy. Keep up-to-date nursing home and in-home-care rates on hand to remind clients why all the financial planning they’ve done over the years could be undone quickly without a policy.
• Denial. No one wants to think about dying. But it’s a fact of life and so is planning for the days that lead up to it.
• Price. This is likely the No. 1 hesitation clients cite. The best way around this is to educate them on the exorbitant costs of caring for someone who is too sick to care for himself. Also, let them know that medical policies do not have provisions for LTC so they are not safeguarded against illness that way. Medicare does not cover LTC and personal assets must be spent down before Medicaid can help. Even then, all of the choices are made by Medicaid, not the individual, so this places even greater restrictions on families.

A quick fix?
There may not be a surefire way to change the public’s views of LTCI, but there are some easy things advisors can do to improve their clients’ opinions, while also boosting sales.

Education should be a top priority. Judith B. Bramson, director of sales and marketing for LTCI at MassMutual, says expanded life expectancy, geographically dispersed families and an increasing number of adult children attempting to juggle careers and caregiving have heightened interest in LTC.

“Education about the need for long term care protection, how to prepare and options available is a critical first step,” Bramson says.

Susan D. Waring, executive vice president and chief administrative officer of State Farm Life and vice president of State Farm Health, says the emphasis of choice will help consumers realize the need for LTCI.

“We need to emphasize that consumers have more choices when they have a plan in place and that LTCI can be an important part of that plan,” Waring says. “We need to raise awareness of the related societal issues and how LTCI can help.”

What works? What doesn’t?
Personal, one-on-one contact with an expert is key. This product comes equipped with plenty of emotional baggage, so personal attention is the necessary extra touch.

“As with any educational void, a multipronged approach that reaches the masses and reinforces key messages via various media would be very helpful, in addition to more, direct, personal outreach,” Bramson says. “On their own merits, TV, print advertising and the Internet can offer strong educational forums to bolster awareness, but turning awareness into action may require a serious personal assessment and consultation with a financial services professional to help prepare accordingly.”

Murray Gordon, president of MAGA Ltd., an independent LTCI agency, says developing personal relationships is necessary, but disagrees that traditional forms of media are effective in this arena.

“Due to all of the privacy laws that have been implemented, it is making it harder for direct mail response,” Gordon says.

He also cautions that using scare tactics and high pressure sales won’t work. Instead, he suggests providing continuing education credits for financial professionals to keep them up to date on policy provisions. He also believes that workshops for the employees and their family members that educate them on LTC planning would help bolster sales and awareness.

Government help
Some say that if enrollment in LTCI doesn’t increase drastically in the near future, government help will be necessary.