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LTCI trends to watch

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Sales look solid. The first half of 2011 was good for individual LTCI sales and it looks like the momentum will continue in the second half. According to LIMRA, individual LTCI premiums increased 9 percent in the first half of 2011 (compared to the first half of 2010) to reach $268 million. Nearly 115,000 Americans purchased individual LTCI from participating carriers in the first six months of 2011, 2 percent more buyers than the same period of 2010. In contrast, group LTC premium declined 32 percent in the first half of 2011 (compared to the first half of 2010, when it was up 35 percent) to reach $63 billion. There was a one-percent increase in the number of lives covered in the group LTCI plans, however.

Linked policy offerings expanding. Hybrids showed strong sales growth in 2010 off an admittedly modest sales base in 2009, but their momentum is unmistakable. Carl Friedrich, a consulting actuary and principal with Milliman in Chicago, says the number of linked- or hybrid-policy variations and insurers offering these products is growing. Among the developments: the expanded use of whole life instead of universal life as the underlying chassis for the life products. Jesse Slome, executive director of the American Association for Long-Term Care Insurance, notes that Sun Life has entered the hybrid market and Pacific Life is about to follow suit. Although hybrids target a specific market–older, more affluent clients–Slome notes that the presence of more insurers and producers has a direct relationship to increased sales, and that bodes well for hybrid sales.

Additional distribution channels developing. Banks’ and wirehouses’ financial advisors are becoming more active in linked product sales, Friedrich says. Those advisors, especially those operating under a financial planning or wealth management model, are frequently more familiar with their clients’ overall finances than insurance-only producers. That additional insight translates into the recognition of sales opportunities that take advantage of the life and annuity hybrids’ multiple benefits.

The web’s role is growing. The web and Google are dramatically changing the world of LTCI, says Slome. Prospective buyers often do extensive online research about the product and many of them seek to learn about LTCI agents online as well. Although consumers are flocking to the web, producers’ responses vary. Some producers develop most of their prospects online and use technology for long-distance sales. Other producers, however, have a weak online presence or no presence at all. They have sufficient new business arriving through traditional methods to keep them busy, so they don’t include the web or social media in their marketing mix. That approach is risky, says Slome: “Insurance agents, insurance marketing organizations and insurance companies who recognize and adapt to the changing marketplace are going to experience greater success. Those who don’t are going to find themselves as out of date very quickly, as Borders found itself in the bookselling business.”

For more on LTCI, see:

Ed McCarthy has worked as a freelance writer and author since 1991. His specialty is explaining complex financial topics in understandable language. Before becoming a writer, he worked as a financial advisor and he is still licensed as a Certified Financial Planner (CFP).


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