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Life Health > Health Insurance

Stop the bi-polar prognosticating

By Linda Koco

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This issue of LTC e-Wire includes several statistics worth chewing on. They range from the ages of group long term care insurance buyers to how much LTC is paid out of pocket to the rejection rates for LTC applicants.

But the eye-popper is this one: In 2008, the number of new individual LTC insurance buyers fell 9%, to 277,000–about the same number as in the early 1990s. That is according to the year-end results provided by LIMRA International, Windsor, Conn. (See the results here )

Every time startling figures like that come out, bi-polar prognosticating begins. That is, certain market observers predict that the probable demise of the LTC insurance industry is at hand, while others predict that LTC sales will soar from today’s lows as baby boomers approach the shores of retirement.

This is maddening, because it doesn’t solve the problem facing each and every LTC insurance professional when the bad numbers roll in. That problem is, what should I do now? Specifically, if the business is really taking a nosedive, should I (or my company) move on to something else? Or, if a LTC insurance boom is really just ahead, how can I (or my company) wait it out until the big bounce comes?

The bi-polar prognosticating is all the more frustrating given that the current recession has cast a pall over everything financial. The downturn has made it hard for LTC professionals to see clearly, even to decide whether to do active marketing of their products and services.

Compounding matters are various theories about the business. These go round and round. For instance: If we simplify the product, more people will buy. If we get our government to curb Medicaid sharply, more people will buy. If we get LTC rate stability, more people will buy. If we target certain markets (Generation X, worksite, young pre-retirees, etc.), we will do better. This list is endless.

That’s not bi-polar. That’s multi-polar. No wonder industry professionals feel overwhelmed by their own industry buzz.

This would be a great place to say, “Here’s what to do.”

Unfortunately, there is no roadmap for responding to downturn numbers. But here are a few points to consider while deciding what to do.

  • The other figures. LIMRA reports that the total value of LTC premiums for coverage in force at the end of 2008 was about $8.6 billion, up 5% from 2007. It also notes that the number of individual LTC insurance policies in force at year-end 2008 increased 2%, to 4.8 million. So, the business results in 2008 were not all downhill.
  • Combination LTC/life and LTC/annuity products. Several carriers are offering these products and more say they will follow. While these hybrid products don’t offer “full” LTC insurance, advisors might use them to build at least one LTC component into the financial plans of clients who cannot or will not buy standalone LTC. For some clients, the products could serve as starter LTC plans.
  • Turnaround. Though no one knows when the current recession will end, most observers agree a rebound will come. For LTC professionals, that is important. As recession has cast a shadow over recent LTC sales, so a rebounding economy will cast light–and opportunity–over the very same business. Yes, the rebound has not happened yet, but for LTC professionals with a long-term time horizon and the ability to withstand today’s storm, the future should brighten up.
  • Partnerships. According to the website of the Center for Health Care Strategies, Hamilton, N.J., 43 states have a LTC Partnership program or are moving towards implementing one, and 24 states have policies available for purchase (as of March 2009). That’s worth noting, since some carriers and marketers have reported experiencing greater sales in Partnership states than in non-partnership states–at least, before recession took its pound of flesh. As the economy rebounds, the Partnership effect could once again help stimulate sales.

Cards on the table: The LTC insurance industry had a rough year in 2008, and that followed several other not-so-stellar years.

But then, most types of business struggled in 2008. The recession absolutely needs to be factored into any assessment of the LTC insurance industry’s future viability. So do the countervailing factors such as those listed above (and others not mentioned).

Consideration of the broad industry, its plusses and minuses, should help clarify matters for those who have been confused by the bi-polar prognostications. The LTC insurance future will not be an “either” or an “or.” It will be both–some upsets, and some gains. But the industry will have a future.

[ To comment, click write to the editor ]

–Linda Koco, Managing Editor, Products and Managing Editor,
e-Publications National Underwriter Life & Health

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