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Life Health > Long-Term Care Planning

LTC Sculpture for the People

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Steady, sustained growth has been elusive for the long-term care insurance (LTCI) industry, even on the heels of a 4% increase in new individual annualized LTCI premium in 2011.

To maintain that momentum in 2012, the onus is on suppliers and salespeople to deliver products that resonate with buyers. And these days, what buyers want most are affordability and flexibility, according to Tom Riekse Jr., a managing principal at LTCI Partners, Lake Forest, Ill.

“We need the flexibility of more moving parts because we have a lot of different types of people who are considering buying the product,” explains Riekse.

Flexibility in the case of long-term care insurance means the ability to tailor plans to client needs using such moving parts as future purchase options, alternative inflation-protection options, ultimate cash benefits, calendar elimination periods and the like, he says. These flex points give advisors the ability to “come in at a more affordable price point to start,” he says, with the opportunity to beef up benefits later.

To Riekse, giving clients and their advisors more latitude to customize plan designs represents another step in the maturation of LTCI as an insurance product. “It makes more sense, generally, to be able to design a plan this way,” he says. “It puts [LTCI] more in line with other types of insurance products.”

Already, 2012 is shaping up to be the best year Debra Newman’s Minnesota firm, Newman Long Term Care, has had in a decade. One reason, says industry veteran Newman, is the growing popularity of shared-care LTCI products, which for couples represent a more affordable alternative to purchasing two stand-alone policies. Not only do they get adequate coverage, they get flexibility in how to use policy dollars and benefits.

Companies such as Newman’s and Riekse’s are also finding a broader market for a hybrid life insurance product that provides policyholders with the option of purchasing LTCI coverage. These so-called linked benefit or combination LI plus LTCI products are finding “a lot of traction,” says Newman, particularly among people who have money sitting in a savings account or CD, earning virtually nothing.

By using that money to purchase a single-premium whole life or universal life LI plus LTCI policy, not only do they get both life and long-term care coverage, they also can earn slightly more interest on their money than if they left it in a CD, for example, notes Riekse. What’s more, if they never need the long-term care coverage, their money stays inside the policy, where ultimately it may be transferred to heirs on a tax-favored basis. Such a combination is gaining appeal among wealthier people in their 60s, who have the liquidity to afford the premium (often $100,000 or more), and who, for estate planning reasons, see merit in protecting their assets from a long-term care event.

Beyond individual policies, Newman sees strong growth in the group LTCI market. These days, people are accustomed to purchasing insurance through their employer, so selling LTCI off the workplace platform makes sense, she says. The challenge for LTCI salespeople is getting their foot in employers’ doors. Newman’s suggestion: start by targeting top company officials and their executive benefits packages. “Make it attractive for the leaders [of the company],” she suggests. That often opens doors to entire employee groups.


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