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How the experts see the LTCI industry evolving in the next five years

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How will the LTCI industry continue to transform? Read this article for unique insights on this issue from four industry leaders.

LTC Consultants President Phyllis Shelton:
“I see policies moving away from the unlimited benefit period since the average purchasing age has dropped to the 50s – too much of a risk for companies to take for a younger person to get a head injury, etc. I see the benefit period going away to be replaced by a block of money which mirrors the LTC Partnership; i.e., how much do you want to protect? I mainly see the LTCI sale becoming 80 percent worksite and 20 percent individual. In 2006, 46 percent of the policies issued were bought at work, so we’re not that far off.

“Let’s put it this way, every prediction I’ve made about this industry has happened – whether it has been product related, company related, or just trends in types of care offered. I have a pretty good track record.”

Center for Long-Term Care Reform Inc. President Stephen Moses:
“Over the next five years, LTC insurance will sadly remain a niche product struggling mostly unsuccessfully to increase sales. That’s because government gives away most LTC in this country through Medicaid and Medicare; the public is anesthetized to the risk and so does not plan for LTC; and the LTCI industry does not understand that those are the main reasons the product does not sell well. It is probably too late now for private insurance to prevent a major catastrophe when baby boomers need LTC, but public programs like Social Security, Medicare and Medicaid have succumbed to coming financial crises. At that point, the poor will suffer with worse care than government provides today; boomers will use their home equity as the only way to obtain decent care; and the next generation will start to buy LTCI when they see their inheritances consumed by their boomer parents’ LTC. Thus, the free market will sort things out over the next 20 years, but it won’t be pretty. In the meantime, my National LTC Consciousness Tour is intended to help wake up the public before it is too late at least for some individuals and families and to show LTCI producers how they can protect more people by understanding (and selling to) the real problem (access to quality care) instead of the phony one (asset spend down) that they’ve been taught.”

Hagelman-Barrie LTC Sales Training Solutions Principal Margie Barrie:
I think that LTCI insurance has an incredibly exciting and profitable future. The baby boomers have impacted every stage of life they have passed through (like a pig passing through a python). As baby boomers realize firsthand the overwhelming challenges of caregiving – primarily as a result of taking care of their own aging parents – and as they realize that they are not immune to the aging process, then LTC insurance will assume its rightful place as a mainstream product. So instead of having to work so hard to convince consumers of the need for this protection, this policy will finally be positioned as an essential part of a person’s insurance package. A pertinent example is car insurance. If a person buys a car, you don’t need to convince them that they need car insurance. Same for LTCI – if person has a certain amount of assets and a decent lifestyle to protect, the decision to purchase this product should be an automatic ?yes.’”

MedAmerica Insurance VP of Legislative Affairs Gail Holubinka:
“The first boomers hit 65 in five years. If projects like ?Own Your Future’ and the partnerships work, LTCI will become an integral personal planning tool much like life insurance or even car insurance. If not, we will go on but our world will be much more difficult.

“If you’re asking what the product will look like, I see a fork in the road as well. Insurers are companies. Companies sell what sells. There is tremendous public pressure for more ?affordable’ LTCI. The public thinks they can have such policies with today’s coverage. The result will be policies with lower premiums but fewer benefits. Neither buyers nor sellers will be happy when reality intervenes. Given demographics and increased longevity, today is not the time to reduce LTCI coverage. More – not less – care is likely to be needed. Again, if education works, the public may finally understand that LTC, like open heart surgery, space exploration, or a Hummer SUV, is costly but worth it. Once perceived need is established, cash and innovation will be the norm. The value of cash/tailor-made coverage will override concerns about cost. When facing a future risk, nothing provides the security and flexibility of cash. If we don’t achieve perceived need, policies will go ?back to the future.’ That is, expect stripped-down products that may or may not provide the coverage the client wants, needs, or expects.”

Corporation for Long-Term Care Certification Inc. President Harley Gordon:
Boston-based attorney Harley Gordon is the president of the Corporation for Long-Term Care Certification Inc., created by Gordon to be the industry’s only third-party professional designation, “Certified in Long-Term Care” (CLTC).

Gordon, a founding member of the National Academy of Elder Law Attorneys, has devoted his professional life to helping older Americans and their families protect life savings from the devastating effects of catastrophic illness.

“My background as an elder law attorney – not as an agent in the long-term care insurance industry – has allowed me to bring fresh and, at times, provocative ideas on how to increase the sale of LTCI,” Gordon says. “In my profession, I witnessed firsthand the consequences of not having a plan for long term care had – not on the individual who now needed nursing home care, but on his family and their finances.”

Believing that LTCI is an effective tool to protect families, Gordon studied how the product was presented. “I was taken back by the high-pressure tactics and focus on risk used to make the sale.”

Gordon chose instead to emphasize a strategy similar to life insurance. “The life insurance industry clearly understands that the risk of dying doesn’t motivate people to purchase insurance – consequences do,” Gordon says. “I believe long term care insurance needs to be sold the same way.

“Once the client understands that there are severe consequences to those he loves, risk becomes irrelevant. The purchase now becomes far more likely because the individual is insuring against consequences, not risk. This philosophy is consistent with how life insurance professionals sell insurance and therefore makes it easier for them to address the subject with their clients.”

Gordon has also influenced the industry by helping redefine what LTCI does. “The traditional thinking is that the product protects the individual by giving him choice of where and how he receives care. I believe long term care insurance serves a very different purpose. The product has nothing to do with the individual: one way or the other he will be taken care of. LTCI protects the emotional and physical wellbeing of his caregivers.

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