One of our contributing writers, Ed McCarthy, is working on a long-term care feature for an upcoming print edition of Senior Market Advisor that will help producers sort through the myths about the product. He recently spoke to several LTCI experts to learn their best advice. Following are two of their key points:
1. Combination products aren’t just for health LTCI declines
Combination products, also known as asset-based LTCI, use life insurance and annuities as the foundation for LTC protection. These products have attracted new attention as a result of recent consumer-friendly federal tax legislation and continuing bad news regarding rate increases from health LTCI carriers.
The target market for these products has been clarified over the past decade, and the demographics do not include those who have already been declined for health LTCI coverage. A targeted customer profile for combination products would include someone who:
- Understands the win-win approach: Win if you need LTC benefits and win if you do not. These are clients attracted to the fact they might not need LTC and know their unused dollars are not wasted but, instead, distributed as a death benefit.
- Appreciates the single-premium alternative to LTC funding. Reallocating existing assets is more appealing to retirees than pulling money from their fixed income, which has been shrinking with the current low interest rates. And single premium means no rate increase surprises.
- Is in fair or better health because combination products are medically underwritten.
– Bruce Moon, vice-president, marketing, The State Life Insurance Company