Indeed something profound, devious and game changing is happening quietly that will forever alter the trajectory of chronic illness planning. On multiple occasions in this column I have taken the position that all life and health agents should be required to be “certified” and held to a basic fiduciary standard concerning the necessity of addressing long term care risk.
I have also frequently suggested that all that is required to accomplish this goal is to remove one word—“not”—from the sentence in the Suitability provisions of the Model Regulations that states that (101g) life riders are “not” LTCI. This well-known deceit could be perpetuated as long as those riders required that the chronic illness risk in question mandated a permanent disability.
I serve on many industry committees all dedicated to moving our industry forward. I have made my position crystal clear for years on this subject. I continue to believe that everyone should be certified and therefore held responsible for making sure that a conversation takes place about chronic risk that cannot be ignored.
To put it bluntly—I lost. Based on expediency and fear of lost sales, a different decision has been made. Quietly and without any real fanfare, life riders that do not require LTCI training are now available. This version of a “chronic illness” accelerated death benefit has now become “health” insurance in disguise. IF ADBRs for chronic illness are filed with the IIPRC there is now alternative language available that does not require a permanent disability. This creates a “New marketing and distribution World” for all concerned. There is not sufficient hyperbole to explain the significance of this new reality. This changes everything! You now have the possibility of a having an easily priced, inexpensively filed, and quickly available in 42 states, game changing chronic illness ADBR. It can now appear as an innocent-looking life rider that is by any definition long term care insurance, even if you cannot use those words to describe the purchase.
Proof of my conclusions is that the majority of companies involved in this subterfuge have hired an LTCI/heath TPA to administer their potential claims. Health/LTCI is now available without the need for training and certification. Personally, I am obviously not pleased with the approach, but I do recognize a sales opportunity when specifically and not accidentally provided.
What does this mean? A speculative conversation:
- At the recent LIMRA-SOA LTC/DI Conference, a representative of the IIPRC stated that 62 companies had filed chronic illness ADBRs. I raised my hand to ask how many were re-files with the new language. The answer was a “substantial number”.
- When I was young and picked something up off the ground that was unsavory by definition, my father’s words still ring in my ears: ”Put that down, it’s nasty!” Chronic illness riders that require a permanent disability fall into that category.
- There is no longer any excuse for a life company to not offer the correct riders. There is a small difference in pricing. It always costs more to do it right…so what?
- The new riders should be available on all products within a portfolio, including term, allowing full and open conversion privileges.
- There is no longer any excuse for avoiding a conversation about care planning issues.
- Any pedestrian life sale can now legitimately be presented as a health care concern. (If you have the “right” rider.)
- Stop the whining about certification requirements; but if you are not prepared for all planning contingencies you are simply out of sync and harmony with any rational thought processes concerning the nature of our profession.
- More Combo sales were made in 2015 than stand alone LTCI. Care to now guess about the future direction of the market?
This column has never been short on optimism. It must be said however: These are by far the most exciting times for creativity and innovation, new sales opportunities and market expansion that I have seen since the birth of HIPAA.
Other than that I have no opinion on the subject.
