On the one hand, anyone who pretends that private stand-alone long-term care insurance is working just fine and that the market is one little interest rate hike away from utopia is being less than serious.
Genworth Financial Inc., for example, has sold a lot of stand-alone long-term care insurance, and its chief executive officer talks wistfully about the idea that maybe the government could start some kind of sustainable private-public LTCI hybrid program.
On the other hand, private LTCI issuers haven’t necessarily done all that much worse than the other suppliers of the bond-yield-supported, defined-benefit programs that are supposed to keep baby boomers alive and comfortable in their old age. And a relentless drive for profits turned Genworth and its competitors into a powerful force for boomer education.
Issuers of private stand-alone LTCI have been the main sponsors of efforts to tell Americans that old age isn’t all about the joy of maximizing portfolio returns, and of imagining having time for golf and long rides on motorcycles. For many people, old age will be partly about having the resources not to die unattended on a miserable cot in a warehouse.
When the Center for Economic Justice tells insurance regulators that they should give up on trying to save stand-alone LTCI and move on to something more practical: Maybe that’s a message that regulators and others should hear and think about.
The world is a big place. For professional reasons, I don’t have any firm opinion about what kinds of insurance products, if any, people should use for any particular purpose. If I did have an opinion, it wouldn’t mean much, because I’m just a writer. I know about turning big clouds of words into smaller clumps of words.
But, still: Stand-alone LTCI company marketers, and the agents, consultants, advisors and other professionals who work with them have done a great job of telling an important story, and I don’t think a company that sells a terrific, simple broad arrangement that includes long-term care benefits with retirement income benefits, disability income benefits, life insurance benefits and a clock radio will necessarily do that great of a job of talking about the LTC benefits component.
This is another version of the “instead of buying whole life, buy term and invest the difference” story. Of course, yes. Sure. But who actually buys term and invests the difference? Everyone blows the money on fun trips, or basic essentials of daily living.
Certainly, some financial services company or government agency should “simplify our financial existence and spend the time and money saved through simplification on improving our benefits and educating us.” But of course, whatever company or agency does that will naturally focus on the fun, dramatic part of the broad benefits package and de-emphasize the boring, slow part.
If, say, Medicare covers operations for car wrecks, and it also covers nursing home bills, the car wreck operation benefits will certainly get much more attention.
So, OK: Insurers are already packaging LTC benefits with life insurance policies and annuities, the Medicare Part LTC proposal is a thing, and there plenty of other ways to bake that cake. But maybe it’s good to find a way to have at least some kind of niche stand-alone LTC benefits cupcake market of some kind out there, to preserve the voices of the people who have a burning passion to warn us about what we’re up against.
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