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Long Term Care Insurance Is At The Crossroads

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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.

Yet all of these developments are just signs of hope. How can we ensure that they translate into real growth in the coming years?

In my mind, it will take strategy and perseverance, along with a strong financial and emotional commitment to LTC insurance among all the industry’s players to generate success.

A number of things need to be done:

1. Carriers must continue to develop innovative and affordable products that meet the needs of consumers today and in the future. The average age of the LTC insurance buyer today is about 58. Products must be designed creatively and responsibly, to deliver a price that people in their 50s and 60s can afford as they juggle with competing priorities, including paying for their kids’ college educations, saving for retirement and keeping up with the rapidly increasing cost of living in this country. And it means providing products that have benefits that respond to boomers’ immediate needs, too, such as caregiver services.

2. Carriers must continue to invest in promoting the Partnership programs and make it easy for producers to get real, value-added training that also satisfies the new requirements.

3. Carriers also must be mindful of the primary concern of buyers, which is the ease and likelihood of having their claims paid 30 to 40 years from now. All of the industry’s carriers must take appropriate action to demonstrate a commitment to consumer protection and doing the “right thing.” This includes working together to establish and implement consistent claims practices and reporting, transparent to the outside world. Along these lines, it is also important that carriers create tools such as articles, websites and videos that help producers educate consumers and convey the many positive policyholder claims stories.

4. Since the responsibility for success is shared between carriers and their partners, key distributors need to step up their commitment to this market as well. Much more needs to be done to draft additional feet on the street and recruit more producers into this business, whether it be through direct efforts or by establishing producer partnering programs in communities to give non-LTC producers access to specialists. It is important to segment the producer market and deliver the appropriate product and support accordingly. The services you provide to a CPA will differ greatly from those needed by an LTC specialist.

5. Last but not least, producers, as the frontline face of this industry, need to make sure they receive the necessary training, then make it a point to talk with their clients about the importance of LTC insurance. They must not allow a slowing economy to be an excuse for rejection, because as we know, consumers often seek protection at times like these. Now is the time to get trained and to stay committed.

Despite the economy, despite the negative press, despite the nay-sayers, the LTC insurance industry is poised for growth. Whether or not that happens depends on the actions and commitments of its key players and their next steps as we stand at the crossroads.

Joseph P. Catalano is senior vice president of distribution, John Hancock Long Term Care Insurance, Boston, part of Manulife Financial Corp., Toronto. He can be reached at


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