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5 ideas from a top LTCI distributor's playbook

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Interest rates and claims are still not doing long-term care insurance (LTCI) issuers any favors.

Issuers have to struggle to get rate increases past some state insurance commissioners. Consumers are about as oblivious and strapped for cash as ever. Credit rating analysts look at a block of LTCI business as if it was a large, ugly tumor growing on the side of a life insurer’s head. 

And yet, the baby boomers are getting older, and the boomers’ parents have gotten much older. Most boomers now know someone in their own generation who has had to be the caregiver for an aging parent.

Is there any hope?

Debra Newman, the founder of Newman Long Term Care, an LTCI brokerage firm, talked about reasons for optimism earlier this month during a webinar organized by LTC Connection

“It’s going to be a good year,” Newman said.

For a look at some of the other things Newman told the moderator, Catherine Dove, read on.

Determined man looking at a storm

1. Newman sees strong top-level commitment to LTCI at the insurers still in the market.

Newman said insurers often invite her to events with top-level executives. She said the top executives at the carriers still in the stand-alone LTCI market seem to be strongly committed to the market.

“These companies want business,” Newman said.

See also: ACLI: Our members should be part of the LTC solution

A bar chart that shows an increase in sales

2. A few insurers are continuing to increase stand-alone LTCI sales, and several are developing significant new LTCI products.

Newman presented LIMRA data showing that, through the first three quarters of 2014, annualized revenue from new sales of individual LTCI had fallen 25 percent, to $233 million, and the number of new lives covered had fallen 27 percent, to 96,325.

But the number of new lives covered fell just 5 percent at one large issuer, John Hancock, and held steady at another large issuer, Thriven.

LifeSecure let the number of sales there rise 153 percent, to 7,392, and the Knights of Columbus let sales rise 97 percent, to 4,945.

Several companies are developing new worksite products, and several are developing new individual market products, Newman said.

See also: LTCI bits: Panel meets, new products and more 

Empty office

3. The producers still in the market face less competition.

Surveys suggest that the number of agents selling traditional LTCI has dropped about 50 percent, Newman said.

“We’ve got a lot more people to see,” Newman said.

See also: How can the industry recruit more annuity salespeople?


4. Planners are getting to know more about how different types of annuity-LTC and life-LTC hybrids really work.

Although the stand-alone LTCI market has been facing challenges, the annuity-LTC and life-LTC hybrid markets have continued to grow, and LTC planners are beginning to get a better sense of how to use each option, Newman said.

Two popular types of hybrids are 7702B LTC riders and 101(g) chronic care hybrids.

Newman said she personally prefers the 7702B riders. The riders offer coverage that resembles stand-alone LTCI coverage, with a 90-day elimination period, use of ability to handle activities of daily living (ADLs) in benefits determinations, and other LTCI-like features.

See also: Consumer rep raises LTCI disclosure concerns

(Image: U.S. Fish and Wildlife Service photo)


5. Limited-benefit LTCI products are looking more attractive.

Newman said she looked hard at life-LTCI hybrids and realized that, in many cases, women who are buying life-LTC hybrids primarily for the long-term care benefits can get the same amount of coverage from a stand-alone policy for about half the price of the stand-alone policy.

Men who are willing to do without cash value and a death benefit may be able to get LTC benefits from a stand-alone policy for about one-third the price of comparable coverage from a life-LTC hybrid, she said.

She gave the example of a life policy with a $250,000 death benefit and an LTCI policy with a $250,000 benefits limits For a 55-year-old man, the life policy would cost $4,400 a year, and the LTCI policy could cost just $1,200 per year, she said. 

One implication, she said, is that any planner showing a client a hybrid product should compare the cost of the hybrid’s LTC benefits with the cost of a stand-alone LTCI policy that provides similar benefits.

She said another implication is that a $100-per-month LTCI policy with a $250,000 may appeal to many consumers who are unable or unwilling to pay for the kinds of comprehensive policies LTCI planners have traditionally focused on selling.

One insurer found when it surveyed consumers that consumers are about three times more likely to express an interest in buying an LTCI policy that costs $100 per month than one that costs $200 per month, Newman said.

See also: EBRI: Real LTC spending


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