Whom does the industry think it is kidding? I know that good LTC group plans are possible, but you rarely see them issued. Most group LTC plans I see have been issued without the proper inflation protection.
How does this happen? The answer is simple. A company requests a group LTC insurance plan for its employees. The personnel department then contacts their insurance broker and asks them to lay out a plan. The plan usually has 3 options, none of which are realistic. The weakness in the usual group plan is that it offers the correct daily amount, but it has a guaranteed purchase option instead of real inflation protection.
Left to his or her own devices, the employee invariably picks the cheapest plan, which in the long run will not do him or her any good. Most agents can design a better plan for less cost on an individual basis. I recently saw one plan that expired upon termination of employment. Does that make sense?
The solution: Make all group plans meet the basic state Partnership requirements before they can be sold. A Partnership plan must have compound or simple inflation protection built in. This should stop the general agent who has very little LTC experience from offering plans that are not good for the consumer.
My belief is, sell a plan that will do the job, not just satisfy the employer’s request for a group policy. As an LTC specialist, I think we may have to go the same route as Medicare supplements: Make inflation-protection plans standard, and let each company charge what they want, subject to the regulations of each state. This type of standard plan may not be the best for agents, but it certainly would be a huge step for the consumer.
I am sure that a great deal of agents will not agree. We have to remember, however, that LTC insurance is for the protection of the family, not the enrichment of the agent.