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4 Life-LTC Combo Product Ideas That Steve Schoonveld Would Like to Correct

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U.S. insurers sold stand-alone long-term care insurance (LTCI) to about 55,000 people in 2018, according to new data from the American Association for Long-Term Care Insurance (AALTCI).

Insurers sold long-term care (LTC) benefits linked to life insurance policies or annuity contracts to about 295,000 people, according to the AALTCI data.

Steve Schoonveld has helped make many of those sales of linked-benefit products happen.

(Related: ILTCI Conference Attendees Soldier On)

Schoonveld is the head of linked benefit product solutions at Lincoln Financial Group.

Lincoln Financial has offered the MoneyGuard family of life-LTC combination products since 1987. An A.M. Best U.S. health review published in 2018 implies that, in 2016, Lincoln Financial might have had about 130,000 MoneyGuard policies in force.

Schoonveld was in Chicago Monday for the Intercompany Long Term Care Insurance Conference. Lincoln Financial is a silver-level conference sponsor.

He said he prefers the term “combination product” for what Lincoln Financial sells to “hybrid product,” because the life insurance coverage in a MoneyGuard policy is separate from the LTC benefits, and the term hybrid seems to imply that two things are mixed together.

Schoonveld also talked about what he feels are some misconceptions about how combo products and other long-term care benefits products work.

1. Combo products lack inflation protection.

About 80% of the MoneyGuard policies sold come with inflation protection, Schoonveld said.

2. The claim-processing offices of insurers in the LTC benefits area are welded to their fax machines.

Lincoln Financial already has an iClaim electronic document filing system, and many competitors in the stand-alone LTCI and combo product markets either have or are building similar electronic filing systems, Schoonveld said.

3. Standardized dementia severity or long-term care needs severity codes would revolutionize claims.

Because LTCI policies and combo products pay benefits when the patient is unable to perform certain activities, rather than because of a medical diagnosis, having diagnosis codes would have little effect on claim processing, Schoonveld said.

4. Adding long-term care provider networks would make long-term care and LTC financing arrangements cheaper.

Schoonveld said that Lincoln Financial already offers policyholders access to discounted provider networks, but that there’s no good way to create strong incentives for LTCI policyholders to use in-network providers, because typical policies may pay off 30 years after the type the policies were written.

The nature of that timeline means that it’s hard to know what long-term care will be like when the insured people go on claim, Schoonveld said.

It’s even more difficult to know whether specific providers or provider networks will still be around, Schoonveld said.

— Read NAIFA Launches Long-Term Care Planning Centeron ThinkAdvisor.

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