LTC service contracts

But the actuarial intricacies involved with writing LTCI coverage have been more complicated than insurers had expected, the Wall Street investors who own the stock company LTCI carriers have been demanding, and the interest rates the insurers can get on the kinds of investments that please regulators and rating agencies have plummeted.

LTCI carriers are like water sellers who have come to sell water at a rock concert in the desert and have discovered that the water company has cut off their hoses.

Some companies are trying to overcome the gap between what consumers need and want and what the economy will let them write by focusing on sales of other, existing types of products, such as critical illness insurance and short-term care insurance (STCI).

Access to care
Roeser and colleagues at American Senior Services Inc. (ASSI) are taking a different route: Having an association sell a package that provides access to LTC planning services and a set amount of discounted non-medical long-term support services, such as companion care services and homemaker services.

Paying for a service contract program can be much cheaper than paying for services directly out of pocket, and the program managers can help hold down costs down by limiting the number of hours of that care members can get each day.

The ASSI program also holds down costs by requiring members to pay for a service contract for a set amount of time before making use of the contracted services, Roeser said.

One step a service contract provider should take is to work with lawyers and insurance regulators to make sure that the contract provider is classified as a contract provider, and not as an insurance company, Roeser said.

At the program Roeser and his colleagues are developing, “we do not rate, classify or rescind memberships,” he said. “Instead of us selecting members, members select us.”

See also:

• LTCI sales boosters: 5 tools
• 50 best ways to generate leads: Tips 41-50
• “Refine” Long-Term Care Insurance, Actuary Says