Periodic election cycles ultimately force us to choose sides even if the choice is the lesser of two evils. When we were much younger and found ourselves involved in choosing teams, there was always some fear in the back of our mind that we might be the one that someone was forced to add to their team as a last choice. Partisanship and sandlot theatrics are beginning to invade our chosen backwater of insurance distribution. This column started out many years back talking about the new product possibilities created with the combo opportunities revealed in the Pension Protection Act as a three legged milking stool. All three approaches—stand-alone LTCI along with annuity and life combos—would be holding up the working posterior of our industry. The point of the analogy was that all three were required to maintain consumer support and benefit flexibility.
Each and every market response is needed, and those who are asking us to choose sides as if one approach was somehow superior to another need to stand down, back up and rethink their own product flavor of the month arrogance. There is simply not one “better” product answer that fits most long term care risk scenarios. This is true regardless of how comfortable or enamored you may have become with a particular product approach.
Each situation must, of course, be customized based on circumstance. What was the primary need that fueled the conversation to begin with and what is your intention as to how best to confront that need? The argument churning the market today seems to be to first identify which team you are on: life with LTCI or LTCI with life. Frankly we do not want to sell some of either if they are not needed. It’s fantastic to able to add a chronic illness accelerated death benefit rider to a life policy to hedge a gigantic bet on the potential destruction of one’s lifestyle concerns. It is also important that the present valued death benefit was not derived from life insurance protection that was not needed or required in your planning process. As we try to determine which product approach fits best there are some “facts” that require our attention:
Most claims are of a fairly short duration, however approximately one in five are catastrophic in nature.
Nursing home admissions do not hit double digits until almost the mid-eighties.
Average nursing home, assisted living and home health care durations are all under 3 years.
Men’s claims will be earlier and shorter than women and the corollary is also true—women’s claims will be later and longer .
It’s never just about the money regardless of how many assets your client may have. Avoiding a discussion of the emotional impact of caregiving may be detrimental to your professional health.
The bottom line is that not just one size, but more important, that not just one product can possibly address every situation. Why can’t each sale involve a little potential mix and match—a little of this, a little of that—applying benefits and features as needed. There are product options which provide guaranteed benefits whether they are needed or not. Not all consumer responses require absolutes. For example, shared care benefits may indirectly help consumers worried about “lose it or use it” as at least one is much more likely to access benefits. A shorter duration benefit for the man and a longer contingency for the female spouse may require more than one policy option. Another example may also be consumer concerns about lengthy elimination periods, and that in and of itself may steer you in particular product directions.
Creative customized solutions are fueled by choice. My suspicions are that the growing plethora of product options is a blessing not a curse. Choosing teams at this point in time is a sure formula for permanent residence at the end of a fiduciary blind alley.
Other than that I have no opinion on the subject.
