LONG-TERM CARE
Extended Care Solutions
for the long haul
Will private insurance solutions finally stand up & be counted?
“For the last 15 years our
‘elevator speech’ has not
realistically addressed
the real danger for
most people.”
One of the ongoing great disappointments in long-term care planning has been the inability
of private insurance to make a dent in the liquidity needs of Americans faced with end-of-life
care. This is particularly true for consumers in the upper end of the mass middle market; those
most at risk of spending down their assets and becoming a burden on their families and/or the
welfare system. A potential fix for this disappointing dynamic is the new world of choices in
combo life and annuity alternatives.
Broadening the appeal, to broaden the market
For the past five years we have worked with the SOA Future of LTCi Think Tank and others
to broaden the appeal of insurance solutions to both agents and consumers. As a result, we
have identified key qualities insurers should consider when designing new policies to address
a broader market. They include:
Transparency and simplicity; this attribute is critical for consumers and skeptical advisors
The inherent value of all benefits including life, long-term care or chronic illness, should
exceed the cost of the policy
Premiums and policy benefits must be guaranteed and preferably paid in cash at
point-of-claim
Benefits and total cost are known at the point of purchase. The actual “net cost” of
the contingent extended-care benefit should be an integral ingredient in the advisor’s
competitive analysis
Quick underwriting decisions that respect the client’s sensibilities and advisor’s time
Policy with no regrets
Simply stated, we believe consumers want a policy they can rely on, and agents want to
offer a solution that they don’t have to apologize for in the future; a policy with no regrets.
Today’s energy in the combo product market segment has been displayed in recent LIMRA
and Milliman Actuarial studies. Sales continue to grow, and actuarial analysis confirms the
profitability of this expanding segment of sales activity. Regardless, neither long-term care
insurance nor combo life/annuity options has a monopoly on the truth. There remains an
important place for traditional long-term care insurance in today’s marketplace. Currently, the
shortest distance between premium and risk remains traditional LTCi. Additionally, no other
option provides business owners with tax-deductible premiums and benefits.
Ronald R. Hagelman, Jr., CLTC, CSA,
LTCP & Barry J. Fisher, LTCP are
Principals of ICE FLOE Consulting,
LLC. With decades of expertise in
the life and long-term care insurance
industry, they provide product
development, distribution & training
strategies for extended care risk.
www.icefloeconsulting.com
16
Perspectives
Q4 2019
Does one size really fit all?
Expanding the market opportunity beyond affluent customers requires a shift in how we
approach the extended-care risk. For too many years we’ve answered the call with a one-
size-fits-all, one-and-done solution. In countless articles we’ve written in the past few years
for the industry trades, we’ve cited numerous studies by Milliman, The U.S. Department of
Health & Human Services and Price Waterhouse indicating that the vast majority of consumers
would benefit greatly with as little as $100,000 in a contingency fund for the extended-care
risk. Being prepared to offer a catastrophic and supplemental approach to the long-term care
financing conundrum will expand the market and satisfy the advisor’s expanding fiduciary
responsibility. Ultimately the agent’s goal should focus on helping consumers control their
claims destiny with private-pay dollars.