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Life Health > Long-Term Care Planning

For LTCI the future is now

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Lots of us will need long term care but few of us want to discuss it. It’s easy to see why. The idea of needing help to meet one’s basic needs is depressing. Throw in the fact that you may not be able to pay for it without exhausting your assets or becoming a major burden to your spouse and/or children and most would rather change the subject. The same could be said for senior advisors looking to add a bustling long term care element to their practice. It can be a difficult subject to bring up but therein lies the opportunity.

“I don’t shy away from talking about long term care,” says Phillip Smith, a Certified Senior Advisor in Wilmington, N.C. with Market Street Advisors. “Seniors face numerous issues. They need to avoid outliving their assets while maintaining a safe, healthy lifestyle and prepare for long term care.”

“A long term care policy can protect and preserve wealth,” notes Michael Guzzo, an advisor at Mark J. Snyder Financial in Medford, N.Y. Guzzo prefers the sensible, non-emotional LTCI approach. “I bring it up at client reviews and when making future plans. It often leads to discussion. Nearly everyone knows someone who’s had challenging times taking care of an elderly relative but not everyone knows the protection LTCI offers.” LTC insurance is critical protection for those who’ve accumulated assets and want to have a choice of how their care will be provided and their wealth protected. Another proponent of the sensible-sales approach is Paul W. Rold II, CFP, CLU, with AXA Advisors in Denver. “There are some 78 million boomers growing older. Social programs such as Medicare and Medicaid will need a lot of revamping. Costs are going to be huge. Shifting some risk to an insurance company makes a lot of sense.”

“Denial” is the most common one-word obstacle to greater long term care insurance sales, explains John Noble, Unum’s director of LTC products. “Everyone likes to think that they will remain independent forever,” he says. “Statistics show that one in three people, after turning 65, will need help with basic needs or become cognitively impaired. This is not the type of heath that we envision for ourselves so many times the answer is: ‘I will remain independent forever.’ While statistics show this is not the case, it’s still a hurdle to overcome.”

Despite the resistance, someone’s getting the message. According to the LIMRA, individual long term care insurance reported a 2 percent gain in new premium sales, according to its second quarter survey. Following four years of decline, individual LTCI sales have increased for the second consecutive quarter. Total premium for the first two quarters of 2007, the last for which it has industry-wide data, was $304.6 million, with more than 144,000 new policies sold. The survey tracked 23 carriers and represents more than 95 percent of the individual LTCI market. New premium for the top five carriers combined grew 7 percent in the first half of 2007.

An evolving form of coverage

The biggest misconception may be that many feel LTCI is primarily for the very old. According to the National Alliance for Caregiving ( and the AARP, nearly 40 percent of adults needing long term care are between the ages of 18 and 64. “There’s definitely a communications issue at stake,” notes Market Street’s Smith.

“Advisors need to work with providers to put the best proposals in front of seniors. Yet what may be ideal for one prospect may not be for another.” Although some advisors may resist marketing long term care coverage due to a lack of knowledge or perceived low commissions, education is really the key to success in the field.

Providers are rolling out new communications material to promote benefits of new policies as they occur. A number of online courses exist to help advisors keep current as many states require continuing education to sell policies. “The key for any senior advisor is to understand the need for LTCI,” says Unum’s Noble. Learn about what Medicare and Medicaid will not cover.

In 2007, John Hancock’s long term care division initiated a Partnership Training series of in-person classes to help producers meet new national LTCI training requirements and learn about new LTCI partnership plans being implemented by various states.

“There is a strong demand for training,” notes Laura Vail Wooster, CLTC, assistant vice president for marketing LTCI at John Hancock, where over 3,000 producers have received LTCI education. As providers work to better their distribution relationships and ensure that advisor marketing and training needs are met, regular conference calls, online training sessions, informative marketing campaigns, legislative updates and newsletters are being used to help advisors stay at the top of their LTCI game.

“There are a tremendous number of resources that advisors can tap,” says Judith Bramson, assistant vice president for LTCI marketing at MassMutual. For information about the forces driving long term care issues, Bramson suggests AARP’s Web site ( as well as the US Department of Health and Human Services site (

But new features on nearly all aspects of long term care insurance have become commonplace as insurers regularly introduce new products with simplified applications, online enrollment and flexible features to meet changing needs. The target for many is affordable, easy-to-understand coverage that offers multi-faceted protection.

“Carriers are innovative and offering reasonably priced and competitive products to cover such items as in-home, elder daycare or assisted-living facility coverage,” says AXA’s Rold. UNUM’s Total Home Care feature allows for anyone to provide care such as a spouse, relative or friend while still providing a benefit to the insured.

“The first generation of LTCI policies were simple catastrophic nursing home-only policies. They lacked home health care or assisted-living facilities benefits,” says Bryan M. Place CFP, CLU, of Place Financial Advisors in Farmington, Conn. “Studies show without exception that consumers want to stay at home. The industry had to quickly adapt to this. The next generation of products addressed these flaws and added contract provisions that consumers demanded.”

At the same time coverage is increasing, policies are becoming more consumer-friendly but there is still progress to be made in this direction. Potentially valuable provisions such as inflation-protection riders are now commonly offered without a regular price increase. Once inflation is purchased as an option on newer policies it automatically increases for the covered individual. Similarly flexibility in how and where one can receive care has steadily increased. Cost-of-living riders are increasingly available as are policies that offer alternative types of care. Some policies allow shared asset pools between domestic partners. Others have introduced international benefits allowing for coverage anywhere in the world.

Avoid communication breakdown

“There will continue to be greater emphasis on cash accumulation/LTC combination products,” predicts Place. “We will soon see fixed and variable annuities with a LTC riders attached. I also expect scaled-down and more simplified products that consumers can more easily understand.”

But is product choice the biggest barrier for consumers or is it product complexity? LTC represents a very different product with very different benefit triggers. “It is important to understand what LTC does pay for and, more importantly, what it does not cover,” says Noble. He says he believes that the industry in general can do more to simplify its message. Similarly, advisors should aim not to overwhelm clients with information as it can be a complicated sell. At the same time, they should be aware of the many provisions typically offered in an LTCI policy should a prospect inquire about them.

“Look at a client’s situation holistically,” says MassMutual’s Bramson. “A client can often reallocate assets to pay premiums. This is akin to moving from an aggressive investment portfolio to a conservative one as retirement approaches. Advisors can see what’s in a client’s portfolio as a funding vehicle. Some can purchase an annuity that can provide income to pay the LTCI premium.”

Matching a client with the right LTCI policy can be like trying to hit a moving target. Unlike traditional, comparatively simple insurance such as term life or even annuities, long term care policies need to provide ongoing benefits for very specific conditions. Numerous changes, not the least of which are health conditions, can take place in a person’s life as they age. Making sure a client is aware of this is one of the first steps when discussing long term care coverage. Pointing out that needs may change can set the stage for presenting the reasons behind why you’re proposing coverage. An advisor who’s done his homework comes armed with a variety of relevant policies can then make a promising proposal. Let the client know you’re presentation is up to date and that not only have you done “comparison shopping” on his behalf but that you’ve selected policies from only top-rated insurance companies and that you’re probably going to be able to help them save money while receiving quality care.

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