What Brokers Need to Know About the LTCi Landscape

LTCiLast year, 260,000 individuals received long-term care insurance benefits, amounting to $8.15 billion in paid claims. The number of open claims grew by 10,000 in 2015. Because of foresight and planning, 260,000 people were able to conserve personal assets and long-term care expenses were paid, at least in part, by their insurance benefit.

Even so, only 10 million Americans own a LTCi policy. The majority of the uninsured have never been approached about long-term care insurance. Many financial professionals sidestep the long-term care conversation, leaving clients and families unprepared for long-term care expenses.

There is little doubt about the need for long-term care planning. Our population is aging. By 2030, more than 20 percent, almost 70 million, of the population will be 65 and older. Health and Human Services estimates more than 70 percent will need some form of long-term care. Only a few have long-term care insurance and self-insuring is a poor alternative for most.

Over the years, LTCi has deservedly earned a bad reputation, primarily because of narrowly defined benefits and rate increases. Early policies paid for only nursing home care, providing little relief for the costs of care provided at home. Home care is preferred by those receiving care and the most common type of long-term care. Most long-term care needs are, at least initially, provided in the home. Secondly, repeated premium increases called for by some carriers became unsustainable for people on fixed incomes, forcing them to allow policies to lapse just when needed most. Other retirees, fearful of being left without coverage after years of paying premiums sacrifice essentials in order to keep their policies.

Today’s long-term care insurance products are more accurately priced. Over time, actuaries have tweaked pricing models with reduced lapse ratios and more accurate utilization rates and expenses. Perhaps most importantly, carriers are pricing products to perform in a low interest rate environment. The extended years of low interest rates strained product performance for many carriers.

The number of carriers now offering long-term care insurance is much smaller than just 3 years ago. Carriers have exited the market and several have been acquired by larger companies. Those left standing have the experience and expertise to underwrite products that are profitable and attractive to consumers. Several carriers are expected to announce new products early this year. Genworth, a significant player in this market, recently announced an even stronger focus on products for the aging population.

A standalone long-term care policy is one way to protect client assets from being reduced by the high cost of long-term care. Hybrid life insurance products can offer comparable protection and overcome client reluctance to pay premium without the guarantee of a benefit pay-out.

The compensation for long-term care insurance is very attractive. Commission is a sizable percentage of first year premium and a smaller percentage of renewal premiums. In other words, selling LTCi is worth your time!

Financial professionals may not realize the powerful influence they have with clients. A recent LIMRA study, Matters of Fact, reveals that clients believe their advisors have their best interest at heart, understand their entire financial situation, and recommend products that are suitable for their situation.

Most clients are uninformed about the reality of long-term care needs, the possibility of needing long-term care, and the wide selection of products available to diminish the stress of providing care with insufficient financial resources. Financial professionals are duty-bound to address this fundamental financial concern with their clients.

Realizing the need to talk to clients about long-term care is the first step. Brokers Central will support you throughout the process. We can start with a product orientation, make product recommendations, and even help you present long-term care insurance to your clients. The most important thing is to make your clients aware of the need to plan for long-term care. You can have that conversation confidently knowing Brokers Central behind you throughout the sale.

Including long-term care planning in your practice will increase your income, increase the value you bring to your clients, and increase the value of your practice. Count on Brokers Central to be your resource and partner. Contact us for an LTCi case discussion today!