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Why A Long-Predicted LTCI Sales Boom Hasn't Materialized

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Editor’s note: The following is an excerpt from “In it for the Long Term,” the Producer Roundtable feature in the December issue of Life Insurance Selling. To read the complete article, click here.

Moderator Charles K. Hirsch, CLU: For many years, people have predicted that long-term care insurance sales would skyrocket, owing to the wave of baby boomers who are aging. Yet, to date, that huge increase of sales really hasn’t happened. In your view, why hasn’t it happened, and what needs to change in order for those sales to start materializing?

Matthew D. Brotherton, CLTC: Consumers and most financial professionals do not have the proper education when it comes to LTC issues. It seems like LTC gets buried in magazines, newspapers and other financial journals that consumers read. Producers are afraid of bringing another professional who knows LTC insurance to meet with their client, so instead they bypass the subject. I feel that in the next several years, LTC insurance will become more prominent as more consumers will have personal experiences. They’ll realize the government is not able to protect them, and they’ll need another source for protecting their assets.

Arthea S. Reed, Ph.D., CLTC: I think there are many reasons:

1. The product was misnamed. No one wants to think about going to a nursing home and most people think of LTCI as nursing home coverage when actually the opposite is true.

2. The perfect storm caused by unrealistic pricing, increased premiums and companies exiting the market have made prospects very cautious.

3. There has been a lack of education about what care costs and what government programs will and will not pay for. The national health care debate has added to the confusion.

4. Companies and producers have marketed largely to middle-class prospects. Although this is an important market segment, marketing almost totally to the middle class ignores the fact that the affluent and very affluent can benefit from the product as much as the middle class can.

5. Because the product has been marketed to the middle class, most financial advisors have advised their wealthy clients against purchasing it. Not only have they promoted the concept of self-funding, they have not seen that it is to their advantage to sell it. Unfortunately, policies sold to the middle class do not always offer enough of a commission incentive for high-producing agents and financial advisors to sell LTCI.

6. Many of today’s product designs have eliminated those features that are most important to an affluent client, such as the lifetime benefit period.

William M. Upson, ChFC, CLU: The first major issue is lack of proper training of agents and brokers, so that they fully understand the issues, solutions, and their own personal liability for not dealing with these issues with clients. The producer’s attitude of “I don’t offer it because I don’t understand it” no longer works when those same individuals are being confronted by the attorneys of those clients and their children, indicating this was not properly handled to protect the family estate.

I believe the other major issue is the lack of support by most government agencies, as well as the limited promotion by insurance companies in this regard. There is very little being done to promote and recommend these products. Instead, that work is being left to the insurance companies. I personally sell 10 times the amount of LTC products compared to life insurance on an annual basis, but the companies keep pushing me to sell more life insurance, as if the people with LTC needs are going to care about or want life insurance premiums they cannot pay in the last years of their lives.


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