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LTCI: Reasons for Optimism

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It’s no secret that a number of economic pressures have created a challenging environment in the long-term care insurance (LTCI) market and forced some carriers to make difficult business decisions.

Market exits. Hefty premium increases. Adjusted policies that limit coverage.

It’s easy to see why these attention-getting topics have recently been grabbing news headlines. Unfortunately reports of these market adjustments are creating the perception that the LTCI industry is declining and the market is shrinking. On the contrary, there is still a lot of potential for agents and consumers in LTCI. The trick is finding the right carriers who are committed to offering quality products and growing the industry.

For example, let’s look at the state of California. It has had multiple LTCI carriers exit the state in the first half of this year alone, yet there is plenty of opportunity in this market. There have also been carrier entries and re-entries into the state this year, and there are many viable, competitive and affordable options for those looking for coverage.

And while the market may be changing, the need for LTCI remains. The number of California residents over the age of 65 is expected to nearly double to 8.3 million people by 2030, according to the California Health Foundation. Most of those seniors will need long-term care at some point in their lifetimes.

There are also strong opportunities in the employer market, as multi-life worksite sales (based on new premium) grew by 20% last year, according to LIMRA. Businesses of all sizes are finding value in multi-life LTCI because its simplicity and flexibility, and in many cases, they can be written for just a few employees. Multi-life plans can also impact a business’ bottom line though various tax advantages and by protecting employee productivity.

Yes, the LTCI industry has navigated through some rough waters recently, but the bottom line is that LTCI is alive and well. It’s a roughly $11 billion in force industry, according to research by the American Association for Long-Term Care Insurance.

For agents, it means there are still great opportunities to offer these important solutions in underserved markets. It’s also worth noting the Supreme Court’s recent decision to uphold the Affordable Care Act, and in turn, its medical loss ratio (MLR) provisions – which most health agents know is causing major cuts in commissions. Adding a strong supplemental product like LTCI can complement your portfolio and help make up some of your lost earning potential.

For consumers, it means that LTCI is still an important part of retirement planning and there are quality LTCI products available to protect their future physical and financial health. Especially when an overwhelming majority of Americans believe they should know more about LTCI, this is the narrative we need to be communicating as advocates of the industry.


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