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Life Health > Life Insurance > Term Insurance

LTCI Watch: Uncertainty

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If interest rates would go back up to normal, that would help.

If public long-term care (LTC) policymakers would get over the idea that everyone involved with LTCI is a greedy moron, that would help.

If someone just conked young people on the head and got them to face the reality that they and their parents will someday be old, that would help.

But it struck me this week while I was reading an article in The New York Times about the long-term unemployed that the private LTCI community, and everyone else selling any kind of retirement planning or long-term planning investment, savings, insurance or planning tool, would benefit greatly if young consumers had some understanding of how it might be possible for them to have decent jobs when they’re in their 50s, 60s and, possibly, early 70s.

The LTCI business and other life and health businesses seem mostly to operate under the assumption that the world is the way it was 20 or 30 years ago, and that older workers tend to have great salaries, paid-off mortgages, defined benefit pension plans (or, at least, well-funded 401(k) plan accounts), helpful spouses, and kids who are out of college.

In the real world, it seems as if typical members of Generation X or Generation Y have, at best, seen a few short years of strong labor demand. Even if they now have what seems to be stable employment, they have the stable employment at a time when the Fed, Congress, and a variety of doomsayers have mostly cut off access to the kinds of generous credit cards, mortgage loans, etc. that helped members of earlier generations buy houses, cope with cash-flow glitches and possibly start small businesses.

Even if they have good jobs now, young and middle-aged consumers see that the hope that they will have good jobs after age 55 may be unrealistic.

How can people in that situation really commit to buying a high-cost winter coat with a lifetime warranty, let alone an LTCI policy?

My best ideas for the insurance community to address this problem:

  • Get the federal government to stop using low interest rates to keep things going in the short term by looting the future. Nothing encourages a pessimistic, short-term outlook like a government that steals money from pension funds and LTCI general accounts to pretend that big banks are solvent.
  • If anyone in the insurance industry actually truly has any vast sums of PAC money and hidden influence, they should put it to work by cracking heads in Washington together and ending gridlock. Given how divided everyone is, maybe they should draw up a center-left path and a center-right path, and have everyone flip a coin in an electronic cigarette smoke-filled room. Make everyone in the room commit to following the path chosen by the coin toss.

Let’s get over the idea that we can resolve our differences through rational persuasion; that anyone really, definitely knows what the right path is; or that endless, fruitless debates are getting us anywhere.

Let’s just use a coin — or a Ouija board, or an astrologer, or tea leaves, or one of those machines state lotteries use — to pick a path and give consumers at least the illusion that we’re going somewhere.

To some extent, insurers benefit from gridlock. Maybe an end to gridlock would mean an end to long-cherished tax deductions, for example. But my argument would that continued policy paralysis and short-term thinking in Washington will lead to problems that are a lot worse for the insurance community than anything that they get out of gridlock.

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