Long term care insurance has seen significant changes in the past few years that could have a significant impact on sales for years to come, noted Phyllis Shelton, president, Long Term Care Consultants, Nashville, Tenn.
Speaking at a session on successful sales techniques here at the annual meeting of the National Association of Health Underwriters, Shelton noted the Deficit Reduction Act enacted in February is behind much of the transformation. The DRA has made access to Medicaid more challenging for many seniors, she said, and seeing that, consumers of all ages will recognize self-insurance of LTC costs is a much less attractive option.
On top of that, consumer awareness of LTC insurance is growing, thanks in part to help from state and federal promotional efforts and attention to the increasing cost of care and tighter underwriting rules making it harder to get a policy as people age, Shelton said.
Another trend has been toward younger buyers. LTC producers increasingly are realizing the younger prospect is an easier sale for a number of reasons, including the fact that 40-year-olds generally have fewer health issues than do 60-year-olds.
In addition, the growth of worksite marketing has helped open up a younger LTC insurance market. The advent of health savings accounts is a huge factor in feeding the growth of LTC insurance in worksites, she noted. Shelton said the average age of individuals buying the product through their employers is 46, compared to 59 for those buying individual policies on their own.
The average premium of $576 for worksite sales is also much easier to handle than the average of $2,700 for the typical individual policy paid up at age 65, she noted.
Another key trend Shelton has seen in LTC insurance selling is in the selection of benefits. She noted the growth of relatively limited coverage periods vs. lifetime benefits. “Lifetime benefits are going away, but if everyone bought a three year benefit period, it would keep a lot of boomers off Medicaid,” Shelton said.
To a 40-year-old couple, $1,800 a year in premiums would buy three years of benefits at a daily payout of $140, she noted. “If they waited 10 years to buy, they would be paying $3,900″ because inflation would drive up the cost of care.