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The Future of Long Term Care Insurance

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What changes are in store for the long term care insurance market in 2010? Two leading experts share their outlook in Part 1 of a preview to ASJ’s complete insurance market outlook, which will appear in our upcoming January 2010 national print edition. To read part 2, click here.

The LTCI industry has been bruised and bloodied in the last year, following several years of stagnant or negative growth. To reverse those double-digit sales declines, let’s look at some of the unique opportunities ahead in 2010. Agents who bring themselves up to speed on the Pension Protection Act (effective Jan. 1) will be rewarded, because a Section 1035 exchange is always an easier sale than asking a client to write a check against current income. Get up to speed with linked benefit products (an LTC benefit attached to either an annuity or a life insurance policy); these are poised to take off.

In light of Congress’ concern about rate increases, and the perennial resurfacing of a C.L.A.S.S.-type program, it’s clear that agents must align themselves with a GA or BGA who will feed them relevant information and provide sales ideas, materials, and support as the selling environment changes. LTCI agents are in a unique position to partner with other agents and advisors who do not want to complete the increasingly burdensome training requirements now required in many states to sell LTCI. Some carriers will allow commission splits with agents not partnership or LTCI certified, making marketing to referral sources easier and smarter than ever.

Lastly, as issue ages drop and employers grapple with caregiving issues, health insurance agents/benefit brokers are increasingly being asked about LTC insurance. Agents who understand and are visible in this world will do well.

Marilee Kern Driscoll, speaker, columnist, consultant, founder LTC Planning Month

Optimism is a wonderful sentiment. “Yes, we can,” was a powerful enough motto to win the presidential – but not enough to effect major and immediate change on the American landscape.

Long term care insurance (LTCI) faces much the same dilemma. On the surface, the industry and its producers have every reason to be optimistic that significant sales growth is imminent, as LTCI becomes the best option left standing in the face of underfunded government programs. But, optimism must be tempered with economic reality.

In 2010, we may begin to see some pockets of significant opportunity for those focused enough to capitalize on them. Specifically, I see several opportunities. The change in tax law affecting linked LTCI products (annuities) will garner some media attention. Also watch for the entry of larger annuity companies that don’t market traditional LTCI.

I also suspect we will see a growth in the number of LTCI specialists. Brokers who find it too cumbersome to learn the ins and outs of long term care products and health underwriting will find it increasingly advantageous to partner up rather than lose sales to the growing presence of the Internet.

The wild card is the Partnership – the Long Term Care Partnership remains the single greatest opportunity for producers to expand their sales to middle-income Americans. While more states are likely to offer partnership LTCI policies in 2010, the marketing needed to achieve the desired market penetration is still nebulous. Until consumers fully understand the benefits of partnership LTCI, it’s unlikely sales will grow significantly as a result.

We will continue to focus on addressing consumer misperceptions that LTCI is expensive. Those who focus on a message of affordability will likely be successful in capitalizing on the new economic realities shaping consumers’ purchasing patterns.

Jesse Slome, executive director, American Association for Long-Term Care Insurance


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