Long Term Care Insurance Is At The Crossroads

As I write this, newspaper headlines carry the message of a looming U.S. recession and job losses, my 401(k) is quickly losing value and the addition I built onto my house last year is already worth about half of what I paid for it. Worse yet, my livelihood is tied to the distribution of long term care insurance in this downtrodden economy. One might wonder, is there any hope?

I would answer with a resounding “Yes!”

There is good news for those of us in LTC insurance. When you take a close look at the signs, there appear to be numerous reasons for optimism. Though the industry has been through some difficult times since we hit our peak in sales in 2001, things are looking brighter today. LIMRA’s 2007 Long Term Care Insurance Report, recently released, shows a 3% increase in industry sales–the first increase we’ve seen in a number of years. In addition to that, a handful of LTC insurance carriers experienced strong double-digit growth last year. Could it be that we are turning the corner?

Certainly, sheer demographics are on our side. With more than 8,000 baby boomers turning 60 every day, we know many of them are watching their parents or other relatives enter into LTC situations and seeing how that can affect their families’ financial and emotional well-being. This has been a strong motivation to purchase LTC insurance in the past and is sure to continue being so in the future.

Add to that the awareness created by the “Own Your Future” campaigns in a variety of states nationwide, and you might even see active consumer interest in LTC insurance grow.

Then there are the Partnership LTC insurance programs. These state-run plans, made possible through the Deficit Reduction Act of 2006, are intended to help ease the burden on shrinking Medicaid coffers and have been adopted in almost 15 states so far. More are poised to sign on in the coming year.

Partnership is viewed by many as a double-edged sword. The upside of Partnership programs is the additional asset protection available to consumers and the renewed attractiveness of LTC insurance as a result. The downside, according to some, is that they can be confusing and require additional producer training, which might scare off new producers.

My view is that these programs may cause some temporary discomfort in our industry as producers get trained and as states proceed through the complex process of adopting Partnership plans. In the long run, however, the new training requirements will be beneficial to our industry as they will enable more producers to become fluent in and comfortable with the language of LTC insurance. The combination of the added protection that Partnership programs provide and a highly trained producer field force should help our industry earn the credibility that it deserves.

Perhaps one of the most hopeful signs is that a number of well known financial services distribution outlets have added LTC insurance to their product platforms as a core protection product over the past few years. This is great news and indicates that, as LTC insurance becomes accepted as a mainstream product, additional distribution opportunities will develop in our industry.

There are 2 keys to success here: First, ensuring that LTC insurance is placed on a level playing field with their other product offerings and second, supporting the product line with investments in marketing and training. The bottom line is, if you don’t support it, another organization will.