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Barry J. Fisher

Barry J. Fisher is is CEO of Blaze ‘n Bear Insurance Services, Inc., and a Principal of Ice Floe Consulting, LLC. Checkout the latest Ice Floe Consulting research at LTC 2020 ( Fisher can be reached by email at Phone: 805-635-7200.

The Never Ending Story: Looking Past the Politics—A Natural Affinity

It’s Not Just About Good Math, It Is About Meaningful
And Progressive Insurance Math

Positive sales results involve risks.

We recognize that good money management lies at the heart of insurance. That in a classic sense insurance companies are certainly sound financial institutions. However we also understand that it is our unique ability to manage and accept some level of risk that provides the meaning and the opportunity in what we do. Known and managed levels of risk acquired by the predictability of historical mortality and morbidity knowledge is the energy source that operates the machinery. To avoid risk is to avoid sales. Insurance companies are not banks or credit unions. The only question that matters in our view is: How much is enough? It is specifically the production thresholds mandated by this question that best predict success or failure.

A Crystal Ball
Product response to the largest financial risk faced by our battered Baby Boomers has been lengthy and varied over the last 25 years with the birth of tax qualified options. As usual the hind sight inspired notion that we oversold benefit and underpriced risk is an all too familiar lament of the post-game armchair finger pointers. In the past we built and sold based on all the issues, dynamics and strategy compromises outlined in this article. This particular risk has frankly been unlike any other in the past. Resistance to accepting the reality of this potential catastrophic financial train wreck has been legendary. The misconceptions about actual cost or likely collision with the real cost of care have been eroded by our marketing efforts but remain prevalent. The product ownership “love” of those who did buy expressed by unprecedented persistency never before seen in previous health product could not have been predicted. The drama of onerous rate increases, restricted underwriting and carrier retreat from the market has decimated faith in the current market by all its stakeholders.

New Market Development and a Path Forward
The risk is very real, 20 percent of Boomers will experience a catastrophic care event. A hopefully symbiotic relationship between public and private resources will be established funding care costs in America. Consumers still prefer to have assistance from professional insurance representatives. Private insurance options both primary and supplemental will remain available and essential as a product resource. Post COVID thinking will place emphasis away from institutional prejudices to home and community-based choices. Technology will play a huge role in managing care in the future and insurance will meet and support that challenge. A new renaissance of product options will continue to require meaningful math and dynamic sales support. The perennial relationship between those who bring in the money and those who count it will remain, as it always has, at the center of an ever expanding universe.

Underwriting concerns will continue to define the nucleus that impedes or expands our sales progress. In truth they lie at the heart of any care amelioration insurance strategy going forward. The immutable laws of an adequate spread of risk demand some form of coercion. The only way to accommodate preexisting conditions is to mandate sufficient participation. The current political climate is projecting this reality in a manner that should have us all concerned and on full alert. The one lesson that our past in marketing insurance solutions has made abundantly clear is that adequate voluntary participation concerning long term care risk has been simply beyond the reach of our industry’s product offerings. The battle lines are clearly drawn between public or private management of America’s largest unprotected risk:

  • As of this writing seismic federal “social” infrastructure legislation is pending. It would facilitate a dramatic increase in Medicare home health care management and Medicaid eligibility.
  • 100 percent mandatory employee payroll tax supported State managed social insurance originating in the pacific northwest would establish a new permanent mandatory social insurance bureaucracy. Currently under consideration by 20+ other states.
  • Legislation has been introduced in Washington DC that would establish an employee and employer shared mandatory social insurance program offering means tested stop loss protection for major care risks.

The winds of change are building just off shore. The sirens song lure of mandating adequate participation and collecting new taxes establishing comprehensive government management of our care futures is achieving named hurricane status.

In our humble opinion, never before has the symbiotic relationship between marketing and actuarial been more important in building private insurance alternatives. One way or another we will be forced to go to the blackboard and begin again. Personal choice of care and at least private control of your claims destiny must not be the exclusive territory of political expediency.

Looking Past The Excel Spreadsheet—A Natural Affinity

What 30+ Years Marketing And Selling Long Term Care Insurance Has Taught Us: It is not just about good math, it is more importantly about meaningful math.

We are indeed at that proverbial fork in the road. Recent history and past performance precludes a future returning to business as usual. As our industry and our country heals and adjusts to current realities, my partner Barry Fisher and I thought now might be a good time to reflect on 35 years of product and distribution “consulting.” Our FAQ is: “What is it you guys do?” Unfortunately there is not a simple answer.

There is a special and immutable relationship between marketing art and actuarial science. The cumulative moving parts of a successful insurance company have several well established and defined disciplines. Administration, IT, underwriting, accounting and legal are all critical to success. However, theirs are, by definition, supporting roles. They will not bear the direct burdens of success or failure. Marketing and actuarial are symbiotic branches and are essential to any insurance enterprise. Both have been and forever shall be co-dependents. Even though the senior executive staff will make final “go” or “no go” decisions, they are primarily acting on information given to them by allied or opposing worldviews provided by actuarial and marketing.

Together actuarial and marketing create the bipolar nucleus that moves our industry forward. It is their combined working synergy that creates product, attempts to predict success and then subsequently measures and remains responsible for business quality and production volume. They must then intimately collaborate on needed adjustments. Together they are constantly challenged to temper good math with sales viability. Ultimately it is the marriage of acceptable levels of risk fused into sufficiently attractive product design that defines our mutual purpose and our industry’s future.

In medieval and renaissance times, kings had a variety of court jesters whose job it was to keep it real for the high and mighty. In our perspective it is often too easy to view sales concerns as comic relief to the serious business requirement of projecting accurate long term pricing assumptions. Therefore, our opening admonition is this: Just because you can make something work on a pivot table doesn’t necessarily translate into a successful product offering. As marketing and distribution consultants we are automatically identified as a voice representing the capricious nature of “the field.” We are asked to help identify prospective consumer purchase preferences as well as predict the potential enthusiasm of the agents and advisors who we ask to deliver premium on a regular and significant basis that satisfies all stakeholders.

Marketing and actuarial have historically represented the most experienced stakeholders in the insurance equation. It is specifically our depth of training and experience that places us in the center of the storm. We both operate in a known past universe of actuarial assumptions and meaningful sales success patterns. Marketing helps identify what consumers and advisors want tempered by what we know good math may actually allow them to acquire. Marketing and actuarial, in our opinion, represents the most ardent believers in the promise of what insurance offers and delivers to policyholders and their families. However, we suspect both recognize that our industry may on occasion fall short in providing suitable private insurance solutions to a broad base of consumers. Our view of how we can work together more effectively to enhance the opportunity for success by expanding our communal strength of purpose is the primary message of this experiential review.

Math or Altruism?
The symbiotic relationship between actuarial science and marketing art is also a reflection of the degree of ownership of our industry’s most sacred normative values. The certain, yet for the most part unpredictable, nature of mortality and the laws of large numbers creates the magic that is insurance. We must constantly hold the required balance between our fiduciary requirements of public financial trust up to the light of our stated altruistic goals to serve the needs of consumers. Surviving and prospering as a business is a delicate balance between risk and purpose. We may begin by protecting widows and orphans yet we also remain publicly dedicated to leveraging excessive risk associated with retirement, disability and health. There is a constant institutionalized internal requirement that as an industry we serve a greater good but that can only take place if it contributes to corporate health and wellbeing.

Good math surrounded by good intentions creates the permanent relationship between those of us held responsible for bringing in premium and those responsible for defining the basis upon which it may be acquired. This mandatory symbiosis must then draw water from the same well. We must together do all in our power to identify the consumer’s predisposition to buy, tempered by what the agent/advisor believes creates motivations to buy, and then a detailed analysis of what was purchased tempered by a careful determination as to why.

Customer Research Cannot Be Overdone
Who is the customer and what do they want? What is your strategy for listening to those directly involved in sales? What is your strategy to acquire consumer research? How does your offering, current or prospective, compliment or challenge existing sales or perceived competitor strategies? How do you think your new product or changes to an existing policy form will be viewed and adopted by the people you are expecting to represent your company? What is your strategy for developing sales intelligence pro and con in real time? All new product development will require some level of education and training; what’s your plan? What is your willingness to support and sustain a flexible and malleable learning curve before you accomplish your desired sales performance?

Perhaps the greatest protection against product failure is an advance determination of what combination of existing industry consumer analysis you will rely upon to make these most critical decisions versus your own efforts at research to determine prospective purchasing behavior. Again, marketing and actuarial will be called upon to provide their combined best guess. Together they will share a common purpose and fate.

Clarity, Transparency and Balance
Too often a clear and convincing reason why a consumer would want to purchase a new and improved version of a product becomes a victim of the urgency to get sales results. This rush to marketing justice is generally the result of C-Suite pressure to justify the corporate treasure associated with its birth. What problems or purposes is the new product or revision designed to accomplish? Was a need clearly identified when you went to the drawing board for the first time? Were the end-users’ needs and desires top of mind? As an example, it is safe to say that agents and consumers would prefer certainty; e.g. guaranteed premiums, clear and understandable benefits, ease of underwriting, transparent claim processing, predictable and reliable company financial bona fides. Is there a match between what you want and what you think your customers want? Will advisors and potential policyholders understand the method to your madness? Frankly any conversation that begins with “be sure to carefully read the fine print” should be suspect.

The devils are in the details. The base plan is simply a structural armature from which truly meaningful benefits have been strung like colorful holiday lighting. Is it long term care insurance or life insurance with a chronic illness accelerated death benefit rider? What are the benefit triggers and/or gatekeepers? Inflation options, nonforfeiture benefits, premium guarantees, possible dividend contortions, claims coordination, etc. will ultimately garner the greatest credit for sales success. Bells and whistles matter.

Again the evaluation of performance will return to the nexus of creative flexibility between marketing and actuarial. Success is often judged by trade-offs. Deal making on what benefits will not become victims of the cutting room floor should be a graduate level course. Marketing and actuarial should both arrive and leave every meeting as a measure of progress toward the “drawing board” goals. Actuarial and marketing have extensive wish lists concerning what they desire, what pricing limitations are mandatory and a knowledge of potential accommodations that may substantially impact sales.

When the marketing team arrives to negotiate with actuarial, they are prepared to compromise. Success may often be defined by how many requests can be sacrificed on the altar of corporate pragmatism and still preserve the necessity of successful sales. Expediency is not top-of-mind to marketing. There are two primary categories of product adjustments. The first may be best described as purpose and intent, and the second relative cost. An example of the first would be a conversation about how best to blunt the impact of inflation. This clear consumer benefit would lead most benefit wish lists. However, options to offset the ever increasing cost of living exist across a wide spectrum of approaches. Attempts to address the issue may include guaranteed purchase option, simple interest, step-rated increases or compound interest formula.

What makes the interaction entertaining and critical to future success is that these choices can be mixed and matched together in endless creative combinations. Subsequently each different solution will then be measured by relative cost. Marketing is notorious for trying to simplify this most important negotiation. They would prefer to view possible benefits included in base rates or riders as a percentage of premium. The initial product exercise was born with a general understanding of what level of premium would not create obstacles to sales. Generally speaking, single digit percentage increases to anticipated base premium may not jeopardize sales. Double digit increases will most likely raise our blood pressure.

Again it is the delicate balance between the initial product raison d’etre, restricted or policed by the projected math and then fueled by the strength of the marketing and sales campaign that defines every product exercise.

Revolution or Evolution
It is difficult to have this conversation and ignore the largest elephant in the product development room. Insurance is conservative by nature. It is important to acknowledge that the following comments are of a general nature. There are certainly moments in time and space where breakthrough innovation does occur (ex. the birth of universal life 50 years ago), however, for the most part insurance companies are followers not leaders. Our past product trajectory history is perhaps best defined by accommodation to market trends. When proposing new product direction or strategy the first question that frequently arises is, “What other companies have adopted this specific approach to expanded sales?” We would of course wish that the source of the inquiry is to evaluate the competition. Insurance companies are not banks; their ultimate success is not built from a lack of risk. The rationalization for examining the mood of an existing market is more likely to determine what level of risk the competition is willing to accept and still market forward.

Product evolution is traditionally gradual and incremental. It is a process of demand from consumers interpreted and voiced by agents. Insurance companies do listen to the field. And this constant bombardment of requests in product revision must again be filtered by the established marketing personnel who must then turn immediately to the actuarial gatekeepers to define what is possible. None of this ongoing process exists in a vacuum. All stakeholders at the company are keenly aware of what the competition has found to be successful. This is true from IT’s wish for platform upgrades to underwriting innovations in evaluating A1c levels. There has never been any respite from the need to change and evolve. Insurance product is not static, markets do evolve and consumer and advisor preferences must be constantly monitored and evaluated. Evolution is constant and product or marketing revolution is rare but not unknown. It is important to add that this industry’s universal opportunity to adjust to a changing sales environment is also frequently subject to significant influence from both political and industry regulation and legislation. In fact market changes are often, as an example, measured by their distance from the implications of specific insurance industry regulatory mile posts such as HIPAA or the PPA. It is specifically government and regulatory revisions or expansions that ultimately define the trajectory of future product premium growth. In our view it is again the unique mutual responsibility of marketing and actuarial that creates the impetus and the voice to upgrade the regulatory environment designed to facilitate consumer interests. Changes in life, annuity or long term care Model Regulations are a real time reflection of the need for change to improve fiduciary guidance and the opportunity for increased market objectives.

In addition it remains critical that we maintain an eclectic view of potential solutions. The classic example of marketing concept cross pollination would be to monitor sale activities which occur within a broader market context such as the development of worksite product or underwriting solutions. Worksite sales success is often a result of product compromise to accommodate blended mortality and morbidity assumptions based on enhanced participation and potentially accelerated lapse scenarios. Worksite sales success therefore traditionally may also reflect a reduced or abbreviated underwriting environment. It is specifically this product flexibility that may offer guidance as to individual product development. In our opinion a more rapidly evolving group market may provide guidance and context to evolving product trends. Another developing resource is the rapidly evolving virtual underwriting environment. Underwriting of senior products or long term care planning options is frequently defined by the degree of the absence of underwriting obstacles and the acceptance of virtual underwriting technologies.

No Plan of Battle Survives First Contact With The Enemy
Regardless of how brilliant and innovative an initial product introduction may be, its ability to accomplish projected premium objectives may flourish or wither once it meets the reality of agent and consumer acceptance. All the careful planning, market analysis, internal financial implications, IT strains and projected product introduction cost implications will not hold water if distribution or consumer predisposition fails to gain any meaningful traction.

It is also critical that you begin the sales journey with a clear understanding that there are always two bad numbers: Too much sales success and too little. This is the proverbial and mandatory Goldilocks principle. As marketing consultants the most feared question we know we will be eventually asked by our corporate clients is: “Based on the product parameters we have just helped assemble, what are your production projections?” Finding that middle ground sweet spot that justifies the development cost, promises the sincere hope of quality and meaningful quantities of new premium yet does not jeopardize current production or require supplementing unexpected reserve strength, lies at the heart of the whole process.

To be continued.

Confessions Of A Born-Again Life Insurance Agent


“We make a living by what we get. We make a life by what we give.”
—Winston Churchill

“Retirement is not in my vocabulary. They aren’t going to get rid of me that way.”
—Betty White

Readers of this publication are generally familiar with my ruminations on topics related to long term care planning and insurance. Being type-cast as a long term care insurance “guy” is understandable. Nearly 70 percent of my time in the insurance industry has been spent as a marketer, brokerage general agent, trainer, and consultant with a singular (some might say maniacal) focus on all things long term care. However, the first 14 years of my “agenthood” was spent in the trenches as a classically trained life insurance agent.

It may seem surprising to some that, as I come into the home stretch of my sixth decade on this planet, I am not longing for life in a planned senior community with a golf course and many recreational and cocktail choices. To quote the great George Burns, “Retirement at 65 is ridiculous. When I was 65, I still had pimples.”

COVID-19 gave all of us time to think about what we would like to do when life returned to some semblance of normalcy. As Ron Hagelman and I wrapped up a few consulting projects, it became clear to me I needed to “re-imagine” (I really hate that word; I have my pronoun and I’m sticking to it!) myself. An internet meme that circulated last year went something like this: During COVID, one became either a hunk, a chunk or a drunk. Having accomplished two of the three, I decided to add a fourth choice: Become a personal producing life insurance agent, again!

How could this notion possibly cross my mind? Could it be early-onset dementia? After all, in my early career I was not all that successful. Don’t get me wrong. I was a competent and knowledgeable agent but lacked the discipline to consistently get in front of enough prospects. Somehow, I sold enough insurance to get by, but Ben Feldman had no worries that I would surpass his sales records.

In the last quarter of 2020, as I contemplated revisiting life as a retail agent, some questions and ideas provided me with direction and a concept for this effort.

  • LIMRA reports continued to point to life insurance ownership rates in the low 50 percent range.
  • Has non-stop radio/TV advertising from term life call centers moved the life insurance ownership needle? Either no, or it is replacing what is not being sold by an aging-out sales force.
  • Feedback from my BGA brethren suggested that most “financial advisors” do not sell life or long term care insurance. Many BGAs today actually write life and long term care business for financial advisors on a split case basis, something that most agents were reluctant to do a decade ago.
  • Over the past few years I have helped some old clients and friends with their life insurance needs. The cases fell into two primary categories:
    1. Insureds who had purchased cheap 20-year term policies in their late 40s thinking they wouldn’t need life insurance after they were in their late 60s. They were wrong for various reasons, but now premiums were a lot higher, insurability was an issue, and conversion was not an option.
    2. Underperforming universal life policies that needed to be rescued.
  • I reviewed the demographics of our local community. Our county has a population just north of 300,000 (small for California), a broad socio-economic profile thanks to the wine and tourist industries, and it is becoming a tech alternative to Silicon Valley and other parts of the state. We have a demographically diverse population; lots of small business owners, professionals, and families with a focus on community and “keeping it local.”
  • I checked out the probable competition: Retail property/casualty and health insurance agents and financial advisors abound. Many offer life and long term care insurance, but based on their advertising and websites, these appear to be secondary offerings to their core business.

Maybe I’m a sap, but I’ve always believed that the services of life insurance and long term care planning are a societal good. Both make a significant difference in people’s lives while alive and at point of claim. After consulting with my wife and business partner Susan Blais, who’s been selling long term care insurance through a referral network she has established over the past several years, we concluded there is room for a local retail life and long term care insurance agency in our area. The initial goal is to establish a business presence via our local contacts and centers of influence, radio advertising, and a website with top-notch educational content. Blaze ‘n Bear Insurance Services, Inc., began operation January 1, 2021.

As I work to refresh my memory on a broader range of insurance planning topics, I admit that I have forgotten more than I remember. Interestingly, one of the first cases I wrote was a non-can disability policy on a young attorney, my first in over 35 years. The insurance carriers and BGAs I have affiliated with show a great deal of patience working with an “old dog” like me. The relearning curve has been steep but satisfying.

Our market focus is simple and clear. We help consumers mitigate risk. We do not give investment advice and are not looking for assets under management. After 30+ years of long term care focus, it’s a pleasure working with young people, especially when we can educate them on something more than just term life. When we sell term we always promote the value of convertibility. I am comfortable discussing the value of par whole life and the “Infinite Banking” concept. I like guarantees and reliable cash value growth. I wish I still had all those whole life policies I bought when I was in my 20s in order to qualify for contests or validate my contract. Indexed UL causes me concern. While some provide transparency, many do not. I understand their appeal, but I am worried that our industry is moving down another long and bumpy road that will not end well 20 years from now.

Working with small business owners is another key component of our strategy. While most plan to fund their retirement via the sale of their business, more than 95 percent do not know its value. We subscribe to a service that allows us to provide credible business valuation and helps us guide business owners in business continuation and succession planning. We also expect this to lead us into some estate planning cases, particularly if current laws are not extended past 2026. Long term care planning also continues to be part of our repertoire. Tax-deductible premiums and tax-free benefits still resonate for owners of closely-held businesses. An unplanned-for long term care event can blow up the best-laid retirement plans.

What has not changed in all these years is that consumers are reluctant to plan ahead unless, as Ron always says, “They’re touched by an angel.” When they do express interest in something we discuss, getting them to the next steps can be a struggle. Many people just fail to plan. Inertia, new “bright shiny objects” in the financial services space (ex. Cryptos) along with exhaustion from COVID-19, low financial literacy pertaining to life and long term care insurance and the unsettled nature of our times are all factors that cause frustration. Perseverance will be critical for success. I suspect it will take 18 to 24 months to create a robust prospect pipeline.

After 45 years in the insurance business, it is hard not to be a “student of the game.” When I was a BGA I was always gratified when one of my agents would actually try one of my marketing or sales ideas. Generally, they worked to some extent. Sometimes they did not, but learning from mistakes does make us stronger. I also remember getting calls from men or women that had never been in the insurance industry wanting to know how they could get started. I used to tell them it will not be quick or easy but being a successful insurance agent is rewarding for all parties concerned.

So, I am off on a new adventure. If you have any whiz-bang ideas that you think will help, please send them my way. I suppose from time to time BW’s fearless publisher will prevail upon me to share mine as well.

Good luck and good selling!

Actionable Intelligence In Long Term Care Planning

Who’s Selling What? To Whom, How And Why?

The relative and apparently inexplicable success or failure of long term care insurance sales has persisted as a frustrating mystery for too long. The ability to reliably gain additional sales momentum and build upon successful sales results continues to defy the most empirical or deductive reasoning. The industry has repeatedly tried to examine prospective consumer predispositions to buy and then subsequently carefully examines consumer rationalizations of those who have taken definitive action to protect themselves and their families. Unfortunately, as you hold this kaleidoscope up to the light, we seem to have forgotten that it is the advisor that has the greatest influence and understanding of the patterns finally projected.

Last year, Oliver Wyman and Ice Floe Consulting, LLC, embarked on a joint effort to uncover and understand attitudes and opinions of the agents and advisors who, despite these challenging times, continue to discuss long term care planning with prospects and clients. The research reported in this article has been supported by a wealth of industry friends. Insurance companies, distribution organizations, professional associations and the media have stepped forward in an effort to enhance our understanding of the future of the long term care planning market utilizing all the tools at hand to help leverage care provision alternatives.

Refinement of the Who is Selling What? To Whom, How and Why? Survey was provided by the following insurance companies:

  • John Hancock
  • Lincoln Financial
  • Mutual of Omaha
  • Nationwide
  • New York Life
  • Northwestern Mutual
  • Pacific Life
  • Transamerica
  • Securian

National professional associations that stepped to the plate to support the effort include:


Industry trade media support came from:

  • Broker World magazine
  • Center for Long-Term Care Reform
  • NAILBA Perspectives

And of utmost importance, was the support and marketing efforts put forth by our colleagues on the distribution end of the equation, including:

  • Art Jetter & Co.
  • Borden Hamman
  • CPS Horizon
  • Long-Term Care Insurance Partners
  • The Marketing Alliance
  • LTCR
  • MasterCare America
  • National Brokerage Agencies
  • National Associations of Independent Agencies
  • National Long-Term Care Network
  • The Brokerage, Inc.

These companies and organizations helped us create a representative sample supplementing the generic master list of 400,000+ licensed life and health agents we would reach out to.

We need to emphasize that the current survey data is specifically agent/advisor centric. The desire to be vicariously present at point of sale helps us identify successful sales techniques and further product innovation. The sales success focus began here in Broker World magazine in May 2004 with the release of “The Producer’s Perspective on Long Term Care Insurance.” Hagelman Consulting facilitated this original work at the height of stand-alone sales with help from LIMRA and the Society of Actuaries. Changing the focus to the advisor’s views of what convinced the consumer to buy did provide an alternative perspective prevailing consumer research. In previous surveys when consumers were asked the most important considerations when purchasing long term care insurance, they identified their excellent judgement in financial matters to protect their assets. Advisors however overwhelmingly identified the consumers’ personal experiences with caregiving as the greatest factor in buying.

The transition over the last 15 years to a world in which 90 percent of all long term care insurance planning solutions are defined as combo life demanded a return to the agent’s perspective. It is our hope that with the continued support of our many long term care planning colleagues that on-going successful analysis from this viewpoint will become a permanent feature of ongoing research into best practices for sales success.

There is much data present in survey responses that helps us understand current practices and perhaps redirect product offerings by fine tuning sales efforts. Highlights of survey findings include:

  • An equal proportion of respondents start the long term care planning discussion by leading with a long term care need and those who incorporate it within an overall financial planning process.
  • 85 percent of respondents were over age 50
    • 59 percent were 60 plus.
  • 75 percent focus on an upscale market.
  • 87 percent include long term care planning in their practice.
  • Only 12 percent of those surveyed described themselves as exclusively long term care specialists.
  • Survey respondents equally preferred stand-alone and combo as their product preference.
  • Although there does seem to be a degree of confusion as to product features, particularly the difference between IRC 7702B and IRC 101g riders, 85 percent claimed to be comfortable discussing all product options.
  • The greatest product comfort level is with stand-alone policies.
  • The greatest discomfort is with chronic illness accelerated death benefit riders.

The 2019 LIMRA Combo Life Report found that 59 percent of all long term care insurance planning options sold included “zero premium riders.” In our survey:

  • 67 percent of respondents do not believe these riders help them close more sales.
    • The remaining 33 percent consider it an important feature.
  • Concern over IRC 101g ADBR’s utilizing the discount or lien method of benefit access raised concerns over professional liability.

Respondents indicated that little happens until the long term care planning conversation is initiated.

Consumer awareness enhances a proactive sales effort.

As previously mentioned, 81 percent of respondents proactively engage consumers in a long term care planning discussion. However:

  • 26 percent stated that consumers raise the issue first.
  • 42 percent indicated that consumers raise the issue more frequently than they do.
  • 40 percent indicated that consumers frequently ask specific questions about “financing” the long term care risk.

Understanding consumer buying pre-dispositions that facilitate a sales opportunity, as perceived by advisors, points to the prospect’s prior personal experience.

The second most expressed consumer motivation was a desire to avoid dependence. Protecting assets was a distant third.

One of our survey’s primary missions was to determine what “power phrases” get consumers to “yes.” They include:

  1. Peace of mind.
  2. Desire to age in place.
  3. Concern pertaining to the high cost of care.
  4. Personal knowledge.
  5. Running out of money.

Best practices as it pertains to policy review provides an optimistic marketing landscape for future sales opportunities.

Policy review is a balancing act between existing policy performance and enhancing quality long term care or chronic illness benefits.

Perceived quality of benefits, at the point of need, is an important aspect of current sales. Policy features that most enhance consumer purchasing interest are:

  1. Available policy features and options
  2. Premium rate guarantees
  3. Inflation protection
  4. Company experiences with long-term care insurance
  5. Joint policy or benefit pool
  6. Financial ratings and reputation

We have witnessed the market shift to combo life policies. With this comes an increased awareness and understanding of the value of a 1035 Exchange.


  • 85 percent of respondents consider adding a chronic illness or long term care benefit rider is in the policyholder’s best interest.
  • 79 percent say their policy review conversations with existing clients includes adding policy benefits covering long term care costs.

Three additional important takeaways from the survey include:

  • Agents/advisors realize that future sales growth will come when products become simpler and more affordable to the middle class.
  • Price (affordability) matters as much as meaningful long term care or chronic benefits.
  • Agents/advisors value the training they receive from their wholesalers and insurance companies. They want more.

Kudos for making this survey possible goes to Oliver Wyman and in particular Vince Bodnar, Carter Khalequzzaman, Elizabeth Hoch and Angela Cobble.

For complete survey results please go to the Oliver Wyman website or the Ice Floe Consulting website

Who Is Selling What? To Whom? How And Why?

Actionable Intelligence in Long-Term Care Planning

When Oliver Wyman and Ice Floe Consulting embarked on our agent and advisor survey, called Who is Selling What? To Whom? How & Why? (WWWHW), we wanted to explore the salesperson’s view of:

  • Best practices in starting the long term care planning conversation.
  • Agent/advisor/consumer product perceptions and preferences.
  • Best ways to get prospects and clients to “yes.”
  • New product insights.
  • Types of training and education that will improve sales results.
  • Why many agents/advisors do not discuss long term care planning with consumers.

There is more to building a survey like this than meets the eye. Some of the issues we grappled with included:

  • Determining our audience; we needed to approach a large and varied swath of insurance agents, financial advisors and legal and accounting professionals who would share their views.
  • Identifying topics and crafting questions that would provide meaningful responses and actionable intelligence.
  • Deciding to “go long or short.” Surveys that want big numbers of responses are generally short. However, we wanted to get a complete picture of the topics involved. Therefore, we chose to “go long.”

To accomplish these goals, we contacted hundreds of thousands of licensed agents and financial advisors through various channels. With the help of Broker World Magazine, NAIFA, NAILBA, Center for Long-Term Care Reform, and independent life and long-term care insurance distribution, we “pounded the airways” with email outreach. Additionally, we purchased a list of 400,000 licensed life and health agents to ensure we had a representative sample.

As a result, we received tens of thousands of answers from over 600 agents/advisors who completed all or part of the survey. As of this writing, we are still analyzing responses and cross-referencing related questions to identify key takeaways. However, we can now share a high-level view of some data we have obtained.

Who is Selling?
There is a committed and well-trained group of agents/advisors that do take long term care planning seriously. While they may consider themselves “specialists,” do not confuse this term with “exclusivity.” The majority of survey respondents consider long term care planning part of a broader insurance or financial services practice, which may include life, health, Medicare, property/casualty, tax planning, legal, estate and business insurance, and employee benefits. These agents/advisors work with various distribution channels, with the majority in the “independent” category. Most respondents have been an agent or financial advisor for more than 16 years and are 51 years or older, with most being over 60. Interestingly, a significant number of survey respondents indicated they refer clients to a long term care planning specialist as opposed to handling it themselves.

Our initial takeaways from this high-level data are:

  • Interest in long term care planning cuts across many different areas of practice.
  • Numerous agents/advisors are aging out of the business.
  • Interest in including long term care planning in agent/advisor practice is wide but not deep.
  • Insurance companies and distributors have a major opportunity to focus younger agents/advisors on long term care planning.
  • Younger agents/advisors should consider this a “Blue Ocean” opening to expand their business practice.

Let us start with a point of context. The sale of life insurance policies with long term care or chronic illness benefits have grown significantly over the past five years. It is important to note, however, that in 2019, 59 percent of all combo products sold included “zero-premium living benefit” riders.1 Life policies that utilize this form of chronic illness benefit provide indeterminate long term care planning value that isn’t generally apparent until time of claim. A majority of respondents expressed concerns over the professional liability issues inherent in selling “long term care planning solutions” without benefits that were clearly delineated. Additionally, they struggle with trying to explain “discounted” and “lien” methods of chronic illness benefit payment.

Our agent/advisor survey respondents clearly indicated a preference towards traditional stand-alone long term care insurance and combo plans that included long term care accelerated death benefits and/or extension of benefit riders. It does not appear that chronic illness accelerated death benefit riders with contractual language and benefit payment methods similar to long term care riders appeal to many agents/advisors. It is not clear from the LIMRA data which insurance companies are using updated best practices re the HIPAA claims qualifying definition. We believe this contractual language matters to agents/advisors and consumers. Agents/advisors also indicated the expansion of life combo policies offering recurring premium options have made these products more accessible to more consumers.

Our initial takeaways from this data are:

  • Utility and value of “zero-premium living benefit” riders are unclear to agents/advisors or consumers.
  • Agents/advisors prefer long term care benefits over chronic illness benefits.
  • Entry-level premium matters.

Who is the Customer?
Agents/advisors agree that the best client to have a long term care planning discussion with has had a family member who needed long term care and/or they have been a caregiver themselves. Cost of care, desire not to be dependent on family, and control over type and location of long term care services are key consumer motivators.

Considering that most of our respondents actively include long term care planning in their insurance and financial practices, it comes as no surprise that they proactively have the conversation with clients and have a high comfort level doing so. However, this comfort level may be exaggerated by our survey sample. A 2017 Consumer/Advisor survey by Lincoln Financial Group found that 28 percent of advisors found it difficult to discuss long term care with their clients, while only 12 percent of our respondents found it so. The Lincoln Financial Group2 survey reported that 76 percent of consumers would find it valuable if their advisor discussed long term care planning with them. Coincidentally, our survey respondents indicated that 75 percent of the time they raise the planning idea before their clients do.

Our initial takeaways from this data are:

  • Experiencing the hard truths of the long term care event continues to be a primary consumer motivator.
  • Proactive and systematic inclusion of the long term care planning discussion leads to sales success.
  • If the agent/advisor waits to be ”asked,” they either missed the sales opportunity or it is probably too late to help.

How–Best Practices–Is the Sale Made?
“Nothing happens until a sale is made.” These immortal words by Thomas J. Watson, Sr., speak directly to the proactive nature of sales success. With this in mind, we wished to determine if there are unifying practices successful agents/advisors use as they navigate consumers through the long term care planning discussion. Approximately 40 percent of those surveyed indicated the conversation began as a specific “dominant need” conversation. An almost equal number said long term care planning was part of their overall financial design process. Sixteen percent said the discussion was part of their life insurance review activity.

“Upgrading” an existing life insurance policy to include long term care or chronic illness benefits was a key talking point for agents/advisors. 1035 Exchange opportunities also came into play when appropriate. The top three client “screening” techniques continue to be health evaluation and insurability assessment, financial appraisal, and discussion of personal financial goals. Ultimately, however, the sale continues to be fueled by experience with long term caregiving.

As we have said in the corporate boardrooms of insurance companies, prior to a consumer purchasing a life or long term care insurance policy an agent/advisor must believe that risk is real and the product they are offering has value. It is clear from our survey that the respondents are passionate about long term care planning. Many own it themselves, have had long term caregiving experiences and believe it is the cornerstone of a complete financial plan. From our experience these are universal traits of most successful life/long term care insurance professionals. The big questions for insurance companies and distribution is: How do we imbue more producers with these attitudes and enthusiasm?

Takeaways for Another Day
As we analyze and correlate survey responses with the team at Oliver Wyman, a number of themes have percolated to the top of our list for continued consideration:

  • Confusion exists among agents/advisors about the nomenclature used to describe various combo products. What is the difference between combo, hybrid and linked? Is it time for the insurance industry to get together and create terminology accepted by all? Clarity should not be a rarity.
  • Even more confusion exists about the differences between IRC Section 7702b long term care vs. 101g chronic illness benefits. What type of training should we create to address the differences, advantages, and disadvantages of these two types of solutions for long term care planning?
  • Technology solutions offered by insurance companies get mixed reviews. Are we ready to examine what is working, and what is not, to make it easier for agents/advisors and consumers to access planning solutions?
  • No consistent “COVID-19 message” pertaining to long term care planning has surfaced. Maybe it is too early, but it seems there are several obvious ones that agents/advisors could be utilizing.
  • Agents/advisors continue to focus on the affluent market. However, the survey respondents indicated that expanding to the mid-market was of keen interest to them. What can carriers and distribution do to help create a larger playing field?

Stay tuned for more actionable intelligence from the WWWHW Survey. 

1. LIMRA—U.S. Individual Life Combination Products Annual Review 2019.
2. 2017 Thought Leadership Research—Lincoln Financial Group Versta Research.

“Best Interest Regulations”— Where Common Sense Equals Good Business

“Common sense is the knack of seeing things as they are and doing things as they ought to be done.” -Josh Billings

Author’s Note: Much of this article will be an interview/exploration of long term care insurance best practices with Susan Blais, an experienced long term care insurance advisor. Full disclosure, Susan is the author’s spouse.

When Broker World’s fearless publisher asked me to discuss best practices in long term care planning, my mind ran through the countless regulatory efforts made over the past three decades to address these issues. I am a veteran of California’s long term care insurance reform in the 1990s and 2000s. This included being a volunteer advocate for CAHU, representative to the Department of Insurance Agents and Brokers Advisory Committee and member of the Curriculum Board. As such I have spent countless hours explaining the advisor’s job with consumers to legislators, regulators, and “consumer advocates.”

Laws and regulations designed to manage our behavior are generally retroactive reactions to remedy a wrong committed by a small handful of “bad actors” who prey on the public. In my experience, most agents bend over backwards to advise their clients in a professional manner. New York Insurance Regulation 187, coming in some form to your state of residence, is a significant effort to impose a standard of conduct on insurance agents and insurers. While not specific to long term care insurance, by virtue of the fact that most planning solutions in chronic illness/long term care are now attached to life insurance products, agents need to expand their fluency to a growing variety of options.

As someone not directly engaged in the sale of long term care insurance, allow me to turn to someone who is.

Question: Susan, please take a moment to tell Broker World readers why, after we sold our brokerage agency in 2013, you decided to re-enter the business as a personal producer.

Since retirement doesn’t appeal to me yet, and I personally witnessed many people dealing with long term care events, I decided to go into personal production. Apparently there aren’t as many experts in long term care planning today as there were a few years ago, and I saw a definite need to promote this essential product to the public. I’ve been finding clients by partnering with property and casualty agents and financial planners, and by advertising on venues that have the right audience demographics.

Question: In reviewing Regulation 187, the issues that seem most relevant to agents/advisors in long term care planning include: Suitability, recommendation, replacement, best interest of the consumer and record keeping. I know you spend a great deal of time with each prospect before they become a client. What sort of fact-finding and suitability triage do you utilize?

I have a basic fact-finder which I’ve amended over time to reflect changes in product offerings and underwriting requirements. The document includes questions about the client’s demographics including business ownership, medical history, family history, and financial income and assets, including existing insurance policies which may be candidates for exchange or upgrade to policies that include long term care or critical illness protection.

I also give a short overview of long term care and the various “branches” of insurance options available, including traditional LTCI and hybrids of life insurance or annuities with LTC/CI riders. I ask about the client’s general risk profile, and how they approach other types of insurance they own, to determine whether they are likely to prefer comprehensive coverage or more limited coverage to bridge a gap between their own assets and a potential need for extended care.

From this conversation I often get a good idea of where to start with a small set of options, meaning different benefit/premium combinations and types of coverage, and set the second meeting where I give an overview of the different types of coverage and how they work.

As the client gets a deeper understanding of the options, they begin steering the conversation to those that appeal to them and I use a sifting process until we come to the right combination of benefits and premiums that the client selects and is comfortable with. By then the recommendation is easy because the client has identified the options that make most sense to them. It usually takes three or four meetings to get to this point, and I use Zoom so I can walk clients through illustrations visually and then email them the documents after the meeting. When the clients are ready to apply, we do it on a Zoom meeting with an online application and electronic signatures. I’ve been doing this for years so I didn’t have to change anything when COVID-19 came along except to add a few questions about international travel and contact with COVID-19 positive individuals.

Question: How do you go about explaining the different long term care insurance planning options? For instance, while there is a shrinking number of traditional stand-alone options, on the life insurance side you’re faced with 101(g) versus 7702(B), chronic illness accelerated benefit riders that don’t all work the same and extension of benefit riders that use different methods of payment. How do you sort through all the clutter?

I start with a basic overview of long-term care as stated above, then explain traditional LTCI as similar to homeowners insurance, where you pay premiums for decades and hope you never have a fire or other disaster which wrecks your home. While it is always prudent to get insurance done, but you would also need to have your fire risk assessment done for the building! For insurance, generally, you never get the premiums back, but you’re glad you had the coverage if you ever need it. Then I contrast this to hybrid policies in general-where someone will always get a benefit-either you because you need extended care while you’re alive or your beneficiaries after you die. I explain that the hybrids are generally more expensive because they cover two risks: The death benefit and payment for extended care if you need it while you’re alive.

This simple explanation often leads clients to express a preference for one over the other. I prepare a few options to show them at our next meeting so they can see the difference for themselves. This leads them to choose either traditional or hybrid, especially after reviewing the cost of each. If they select hybrids, I’ll explain the different types available and show them examples of how they work. I have a few favorite carriers I use for this because it’s easy to show the differences in how they work. I always explain the pros and the cons of each option so the client can make an informed decision.

Another key factor of suitability is the affordability and stability of premium payment. High-net-worth individuals tend to favor single-premium or ten-pay options, and often prefer a hybrid where they can see the cash value and maintain some control of the asset. The clients who ask about monthly premium are at the other end of the spectrum, and we spend time finding a premium level they’ll be able to maintain after they stop working.

Question: With the ability to 1035 Exchange cash value from an existing life policy without a chronic illness/long term care benefit, policy review and potential replacement become an option for the consumer to “upgrade” their coverage. How are you approaching this aspect of the planning discussion?

In the initial fact-finding session I gather information on all life insurance policies and annuities the clients own and do a brief policy review to see if each product continues to serve the purpose for which they purchased it. In many cases the clients are willing to look at exchanging current policies for those that include long term care or critical illness riders because their children are now grown or they don’t need the same amount of life coverage they originally did. Using the cash value in such policies can allow clients to upgrade their existing coverage with a minimal premium expenditure. And it gives them peace of mind knowing they’re protected if they should need extended care in the future.

Question: What tools have you employed in your practice to keep notes and maintain records?

I use a hard copy fact-finder when speaking with clients on the first call because I can hand write notes and check boxes faster than on the computer. I scan the completed fact-finder into the client file and input the data into SalesForce, which is customized for my specific use. I can’t recommend SalesForce highly enough, as it is HIPAA-compliant and keeps me organized because I can keep all documentation about each client in one place.

I also use a fairly new email provider called Paubox, which provides HIPAA-compliant security without the use of passwords or links for a client to access their information. Emails are transmitted exactly as usual, but include a flag which shows they are secure. Client replies to my emails are also secure, and therefore sensitive information can be passed between us without concern.

The third software I use is called Match My Email, which automatically takes emails to and from my clients who have a record in Salesforce and adds the emails to their records every few hours. The combination of these three tools helps me stay on track and ensure my client’s information is safe and “on the record.”

Question: “Best interest” seems to be common sense and something that all agents/advisors can readily get behind. On the other hand, as I used to tell legislators, regulators and “consumer advocates” back in the 1990s and 2000s, if an agent were to conform to every aspect of the insurance code they would spend unending hours with a prospect paralyzing them with minutia. Clearly a balance needs to be struck. What advice can you recommend?

In the 35 years I’ve been in the insurance business, with health insurance carriers, as a wholesaler and now as a personal producer, I’ve met very few agents who didn’t put their clients’ best interest first. Personally I never recommend a product to a client I wouldn’t buy myself, and I spend lots of time on the issue of affordability. In the case of long term care insurance, where a client may be paying premiums until they die or go on claim, we discuss whether premiums will be affordable after retirement and specifically where the client expects to get funds to pay premiums for that long. There’s no reason to begin paying on a policy they cannot maintain until they need it.

The sorting process I use to get a client to the right combination of benefits and premiums for them has held true for many years and I expect it will continue to do so. To me it’s a matter of gathering facts, interpreting the data, and making the best estimate of what is best for a client based on their needs, desires, and limitations at the time of purchase. If we as professionals keep our client’s best interest in the forefront of the whole process, which I’m sure we do, then I believe we have met both the letter and the spirit of the law.

That said, it’s important to keep good notes from client meetings and to do most communication by email so records are maintained for the long term. When I send clients their copies of illustrations after a meeting, I also include some of their comments about which products they found desirable and why. This prevents misunderstandings and keeps an effective trail of our discussions so I can show the significant due diligence I do with every client, taking their feedback into account.

I may go overboard giving clients full disclosure of the pros and cons of various options, but I feel it’s my duty to clearly outline the facts so their decision is an informed one. I prefer to spend time with clients to ensure they understand what they’re getting, and so far I’ve never had a client complain that I pushed them into a decision. I take great satisfaction in that, and sleep well at night knowing I focus on finding the right match for each client. I may lose a few sales that a more aggressive sales approach would close, but that’s okay with me. Clients I thought were lost often come back months later, ready to purchase. Respecting a client’s decision-making process and timing is important.

Thanks Susan. All great advice.

Undoubtedly regulators will continue to find ways to oversee agent/advisor practices in this changing and developing world of financial instruments designed to help consumers plan for their future. As Susan has demonstrated, operating in the best interest of your clients takes time, education, training, tools, and a whole lot of common sense. Ralph Waldo Emerson wrote, “Nothing astonishes men so much as common sense and plain dealing.” Indeed! Great words to live by.

Chasing Unicorns

“For myself I am an optimist—it does not seem to be much use to be anything else.” —Winston S. Churchill

Optimism is a blessing and a curse. It can keep one going when the going gets tough, or it can keep us in the game well past our “sell-by date.”

For the past five years we’ve been following the trail of an elusive creature: A credible and affordable long term care insurance solution for the middle market. During this time we’ve written about addressing the needs of a vast population that is underserved. We’ve worked with several insurance companies in the effort to create a life insurance combo offering that appeals to a broad cross-section of agents, advisors and consumers. While there has been progress, it’s been excruciatingly slow with many fits and starts along the way.

Regardless, in the spirit of two adventurous optimists, we’d like to share what we’ve learned about how the life/long term care insurance industry might proceed in their stated desire to create mid-market solutions. The good news is, we’ve recently seen some insurance companies re-tool their 101(g) chronic illness riders to make the benefits more meaningful to consumers, which we’ve been advocating for the past five years. We’ve also seen efforts to create more affordable policies with guarantees and a simple application process.

In our recent efforts, several issues pertaining to a mid-market combo offering came into clear focus:

  • While combo sales have seen significant growth over the past five years, the number of Americans purchasing any option to leverage the extended-care risk has remained static.
  • Many acknowledge that expanded market growth can best be accomplished by developing a supplemental sales strategy that appeals to the upper end of the middle market. This will help guarantee private care for those most at risk of spending down their assets.
  • We believe a guaranteed-premium life insurance policy that provides clear and certain chronic illness benefits would best suit the middle-market supplemental sales approach. By combining the most current IRC Section 101(g) accelerated death benefit rider (ADBR) definitions for benefit qualification, with a streamlined underwriting process, we believe expanded sales growth and market penetration can be accomplished.
  • Also, future product enhancements must consider potential changes in care delivery and generational consumer preferences about where they wish to receive care. Technology will be a game-changer and policy design must keep pace to prevent the insurance from becoming irrelevant.
  • In the short-run, IRC Section 101(g) ADBRs are best suited to accommodate future preferences in care delivery due to the required “cash” nature of the benefit payment.
  • Effective penetration of the middle market will require advisor education and field training, focused on the value of the supplemental approach to extended-care planning. In order to accomplish this mission, a deeper understanding of what’s currently working (or not) in the field is imperative.
  • We have proposed research into how advisors are currently positioning extended-care solutions for consumers in order to understand the end-to-end sales processes utilized in the field.
  • We need to:
    • Answer the question, “Who’s selling what to whom and how?” for better sales strategies;
    • Have a deeper understanding of various distribution channels to understand and expand market penetration;
    • Create best practices for advisors, particularly as it relates to their growing fiduciary responsibilities;
    • Recognize that unique distribution channels influence the conversations advisors have with consumers. Understanding these factors will assist in fine-tuning sales and training strategies; and,
    • Develop new advisor training based on findings from the above-described research.

Refreshed and informed data gathered from successful producer behavior can lead to new opportunities for more precise training of current and future advisors. For instance, in a recent project we learned that live sales training is still more effective than web based. Over the past few years web training has become ubiquitous and increasingly ineffective.

A great deal of work needs to be done if we’re going to effectively serve the upper end of the middle market. Getting the product right is an important, but far from the only, requirement. Fulfilling the needs of this long-forgotten population cohort will require answers and new innovations. For instance:

  • How do we educate mid-market consumers that private insurance provides better choices than relying on Medicaid as their primary fallback?
  • How do we get back the hundreds of agents who sold long term care insurance in the early 2000s but now don’t have the conversation with clients? How do we appeal to younger financial service professionals who are not being trained in extended-care planning?
  • Can an effective direct-to-consumer approach be created to expand the market for extended care solutions?
  • Are there insurance companies willing to spend the time and resources necessary for success in the mid-market? Wrestling with the competition over the affluent market will only go so far in solving the looming financial crisis that will be faced by many mid-market consumers.

One thought that has crossed our minds is that the mid-market may indeed be a mythical creature. Optimism is no substitute for realism in this quest to expand sales to an increasingly affluent portion of our population and one that has unrecognized and unfulfilled long term care planning needs. We need to rethink some basic questions about who the customers are, what they want, and how we can best fulfill their desires.

The old saying “It ain’t dog food if the dogs won’t eat it” is often ignored when sitting around the product design drawing board. In this case our customers include agents, advisors and the buying public, and they all want something tasty.

These are just some of the challenges we face in chasing down the unicorn of mid-market extended-care planning. To us optimists, it means we have many opportunities in a target-rich environment. We will keep you posted on our ongoing adventures.

The Earth Is Flat

Distribution’s Bird’s Eye View Of The Life Combo Marketplace

“The flat Earth model is an archaic conception of Earth’s shape as a plane or disk.”—Wikipedia

For a significant portion of human existence, most believed the earth was a flat disk floating in a body of water. Lack of perspective generally leads to incorrect conclusions and undesirable results. Even after Aristotle provided observational proof that planet earth was spherical (330 BC), it took centuries for many of our ancestors to accept this reality. Today the pseudo-science latter-day advocates of flat earth theory can be readily found on the internet. And of course, lest we forget, if one does not accept the truth of some new philosophy or concept, we are branded as a “flat-earther.”

Now that we have more credible data regarding the long-term care risk, is our world flat or round?

What have we learned from the claims history we now have? Generally, we expected the worst and were mostly right.

  • We probably knew the desire for sales could lead to an underpriced attack on a virgin market.
  • We stumbled into a category of products totally unprepared for the affection consumers would have for it once purchased.
  • We followed the money and ended up with what can fairly be described an exclusively “elitist” option.
  • Consensus continues to be elusive regarding the basic question: “How much is enough?”
  • While the burgeoning combo market was fueled by regulation and legislation, we probably could have known a contingent approach to a marginal risk was more appropriate than a product designed to be all things to all people.

Does the long term care insurance industry have its share of flat earth thinking that needs to be reconsidered? We can offer several “sure things” that need to land in the dustbin of history:

  • The fervent belief that all chronic illness risk is catastrophic;
  • Premiums could go up, but since the company has never raised rates, they probably won’t;
  • Forcing agents to take eight to 16 hours of continuing education every two years will make them experts;
  • “Free” or “No-Cost” living benefits;
  • The lackluster performance of State Partnership Plans was predicted by some but ignored by most; and,
  • Tax incentives on their own will not drive sales.

Please bear with two elder “statesmen” of the marketing arena to make an observation. There are only two reasons Americans purchase long term care or chronic illness coverage:

  • The “fear” of adult children with parents currently receiving care that it can happen to them; and,
  • The desire to protect and preserve financial legacies.

In addition, we are currently mired in an identity crisis. What on earth shall we call the myriad new insurance planning choices springing from the loins of insurance carriers, and how do we describe the services policies pay for? No one wants to call what we’re now selling long term care insurance—too much bad press. We agree that, by law, we cannot call IRC §101(g) chronic illness accelerated benefit riders (“ABRs”) long term care insurance. However, consider this: When comparing two policies with nearly identical qualifying event language, one with an IRC §7702(b) and the other a §101(g), what distinction can we make? Is there any real difference other than the source of funds? Does it make any strategic difference what we call it? Currently the field is stumbling over a number of naming options:

  • The policy formerly known as long term care insurance;
  • Chronic illness coverage;
  • Long term support services care;
  • Extended care coverage.

Is it any wonder that agents/advisors remain baffled when we introduce yet another policy designed to pay for something most consumers don’t want to think about? With the rapid aging-out of many long term care insurance specialists, we are working with a generation of financial planning newcomers that chase the latest technologically advanced financial instrument with bright shiny objects attached.

In some ways, the current surge of combo product sales is following the same path that traditional long term care insurance trod from 1997 to 2010; what many of us consider the Golden Age of traditional LTCI.

  • Everyone is focused on the affluent—the smallest demographic cohort;
  • We’re still trying to sell catastrophic coverage to everyone—too much to too few;
  • We’re not taking a stand against illusory policy benefits;
  • The industry’s consumer outreach continues to be non-existent;
  • Agent/advisor training is inconsistent and generally off-target;
  • We haven’t made this easy for anyone!

Are we really going to stick to the same flat-earth thinking employed by our not-so-distant ancestors, or can we break out and try something new that may appeal to a wider audience? In designing new combo offerings, what questions should we ask so we don’t make the same mistakes?

Who Is or Should Be the Customer and What Do They Want?
The industry has done a fairly good job of convincing affluent consumers to purchase catastrophic traditional and combo policies to protect their assets and income. In fact, companies currently offering combo policies with long term care (IRC §7702b) or meaningful chronic illness (IRC §101g) accelerated benefits continue to scramble after well-off customers which represent only about 17 percent of the population.1

There’s no fault in this approach; as the legendary bank robber Willie Sutton said, “I rob banks because that’s where the money is.” However, the middle mass market represents 83 percent of the population.2 So why not go where the people are?

We have for some time advocated focusing on the underserved middle mass market. These consumers are most at risk of being unable to choose the care they want because they are often encouraged or compelled to impoverish themselves to qualify for Medicaid benefits. These consumers are 50 to 70 years old, earn $75,000 to $150,000 per year and have liquid assets of $100,000 to $300,000. This large market would be well served with access to an affordable, simple, supplemental long term care or chronic illness solution that would prevent them from slipping from private pay into welfare.

There should be only one goal for those concerned with extended-care risk mitigation; to help guarantee the dignity and personal choice that comes from remaining a private pay consumer. Therefore, we must acknowledge two equally valid approaches to the risk: 1) transfer the majority of it to an insurance company; or, 2) secure additional funding to supplement other sources of income at the time of claim.

What are customers looking for when it comes to their insurance company and financial advisors? For insight, we turned to the 2012 Ernst & Young Voice of the Customer Survey, the 2015 Deloitte Life Insurance Consumer Purchase Behavior study and the 2016 SOA Middle Market Life Insurance Thought Leaders report. The good news is consumers generally trust the life insurance industry. Even better, LIMRA reported that in 2016 over half of Americans (172 million) owned some form of life insurance.3 This is up from a 50-year low in 2010, when they reported that “56 percent of households had no individual life insurance policy.”

These studies confirm that consumers want a relationship with an advisor who will discuss their insurance needs and provide them with guidance. However, the public is becoming more self-actualized in their decision-making process. They want clear, simple and concise information about their options and how the financial instruments they purchase will work for them over time. Product transparency is critical. The Deloitte study sums it up clearly: “Our study suggests that the life insurance ‘winners’ of tomorrow will likely be those organizations that blend an advice-driven approach with a digitally-enhanced engagement strategy to help meet evolving consumer expectations.”

Ernst & Young and Deloitte agree, it is critical to respond to the changing needs of our customers as their life cycles progress. Strikingly, the life events we focused on in the 1970s continue to hold true; marriage, parenthood, home ownership, and retirement are all key buying times for life insurance. By successfully weaving the life insurance and chronic illness messages into a consistent marketing effort, we can encourage a wider group of Americans to consider insurance planning with a guaranteed product that can withstand a lifetime of transitions.

There are hurdles to success in this marketplace, including: Competition for premium dollars, pricing, underwriting, providing pertinent information through various channels, agent recruitment and training. However, these obstacles can be surmounted with affordable insurance products that appeal to consumers during various stages of their lives.

The Forgotten Customer
In our experience, life and long term care insurance products have historically been designed in the dark recesses of home office conference rooms. Even if an attempt at consumer research is made, we remain skeptical as to who created the questions that were asked. Eventually, a regional vice president arrives at the agent’s or distributor’s door with a new product that no one remembers requesting. They are then prevailed upon to stop selling something that’s currently creating revenue for their agency for a new and improved “widget” that isn’t appreciably different than what they’re currently selling. Three months later, everyone at the home office is scratching their heads as to why their new and improved invention hasn’t hit “plan.”

The Society of Actuaries reported that when most consumers are asked why they didn’t purchase life insurance, the answer is that “no one asked them.4” As previously noted, consumers want to work with agents and advisors they know and trust. Don’t you think those “no ones” ought to be considered earlier in the creation, development and distribution loop before releasing a new insurance product? If you’re asking valued distributors to spend their own time and money promoting a new policy, it might do some good to ask them what they want. It’s not always just the lowest premium and the highest commissions.

Avoiding the Bad Old Days
Most IRC §101g chronic illness accelerated benefit riders currently being introduced into the marketplace are a boon to consumers, agents, and insurance companies for several reasons. They allow us to address many of the pitfalls we grapple with on various sides of the equation. However, the life insurance industry needs to do a better job of eliminating old versions of chronic illness ABRs often hidden behind a consumer appeal to “living benefits.”

These “no current cost” riders are often represented as a comprehensive inventory of potential catastrophic contingencies. The problem with the “discount” method is that it’s impossible to precisely define the actual benefit paid when a claim occurs. The discounting method represents an uncertain claims future. Offering benefits that are a mystery should raise some basic fiduciary concerns.

Discounted ABRs resemble the illusory benefits so often vilified in the pre-HIPAA days of LTCI. The potential for consumer disappointments when attempting to qualify for benefits under these structurally flawed dinosaurs will certainly be followed by consumer complaints and regulatory scrutiny. The negative press discounted ABRs garner will sully the reputations of companies using all types of chronic illness definitions and benefits. Current allowable §101g benefit qualifying language closely resembles that found in HIPAA-sanctioned long term care insurance. Here’s an opportunity for the industry to exert a level of self-policing and to do the right thing.

Veritas vos Liberabit (Latin—The Truth Will Set You Free)
As a parallel to Aristotle’s day, we now have observational truth that the world of chronic-illness risk management is not flat. There is no need to confine ourselves to the myths and methods of days past. Creating viable and reliable private-sector extended-care insurance solutions is important work. Clearly we have a great deal of opportunity ahead of us.


  1. Society of Actuaries Long-Term Care and the Middle Market—May 2016 (Bodnar, Forman & Zehinder).
  2. Ibid.
  3. Facts of Life 2017 from LIMRA.
  4. 2016 SOA Middle Market Life Insurance Thought Leaders report.

The Elephants In The Room


If you want to increase your success rate, double your failure rate.
—Thomas John Watson, Sr., Founder of IBM

If it’s true that every failure gets us one step closer to success, then we’re getting closer to solving the extended care planning puzzle for more Americans. Having spent the last two years working directly with consumers, their families and financial advisors in the throes of ongoing unplanned-for long term care events, I’ve had a belly full of “failure to plan.” At the risk of sounding a negative note, let me be clear: There’s plenty of blame for this failure to go around.

The fact is, though, that the rapid growth and availability of combo long term care planning solutions gives the insurance industry, producers, financial advisors and many consumers another chance to get on the right side of this national epidemic. Here’s a key observation in the 2016 Society of Actuaries Post-Retirement Experiences of Individuals Retired for 15-years or More:

“…many of the unexpected expenses in retirement could be mitigated with better planning and financial risk products. Few have annuities, long term care insurance, reserve funds for home maintenance and repairs, or other products to help them manage expenses in retirement. A number have life insurance coverage, but coverage levels are often low and intended only to cover funeral costs. Use of these products might help to prevent financial shocks in retirement.”

In my experience, mid-market consumers are most negatively impacted by the unplanned-for long term care event. The affluent can afford to self-fund the risk or purchase various insurance planning solutions. Low-income Americans generally get support from family and/or state and federal safety nets.

Who and what is the mid-market? For this we turn to a Society of Actuaries (“SOA”) presentation prepared by Vince Bodnar, Stephen Forman and Sania Zehinder in 2016 entitled Long-Term Care and the Middle Market. This report identifies two primary components of this demographic:

Middle Mass

  • 55-64, average income $75,000, average assets greater than $100,000;
  • 83 percent of the market for long term care insurance (LTCI);
  • Low ability to fund catastrophic costs out-of-pocket; and,
  • Good ability to pay for LTCI.

Mass Affluent

  • 55 – 64, average income $132,000, average assets approximately $400,000;
  • 17 percent of the market for LTCI;
  • More discretionary income to spend on LTCI; and,
  • Agents/advisors prefer this group.

What do these consumers think of and expect from the life insurance industry? The good news is that they generally trust us, this according to the Ernst & Young— Voice of the Customer Survey (2012), Deloitte Life Insurance Consumer Purchase Behavior (2016) and the SOA Middle Market Life Insurance Thought Leaders Report (2016). In 2017 LIMRA reported that life insurance ownership has bounced off its 50-year low of 2010 with 8 million more people insured. Just over half the U.S. population now owns some form of life insurance, group or individual. However, why don’t more people own this important personal financial safety net? According to the SOA, it’s because no one asked them to buy!

Is life insurance combined with chronic illness (§101g) or long term care (§7702b) benefits the planning answer for mid-market consumers? In many circumstances yes, but let’s consider some aspects of our past failures in order to get behind the right solution for America.

Right-Sized Potential Risk Will Lead to Affordable Solutions
While we cannot deny the existence of the catastrophic long term care claim, this can no longer be our primary sales focus. A 2016 report by the U.S. Department of Health & Human Services indicates that the average cost of HIPAA level long term care support services for adults turning age 65 between 2015-2019 is $75,900. The average duration of claim for men is 1.5 years and for women 2.5 years.
When most consumers need care, all their resources generally come into play: Monthly income, savings, investments and sometimes life settlements or reverse mortgages. Therefore a $50,000 to $75,000 life insurance policy with a two percent or four percent per month accelerated death benefit rider will likely be enough to allow them the private paid care they want and need. This level of coverage has been shown to be affordable to mid-market consumers in their 50s and 60s and we’ve eliminated a primary objection to traditional policies: “What if I never need care?”

Guaranteed Premiums, Values and Benefits
Agents and consumers who have suffered through the travails of ongoing traditional LTCI in-force rate increases understand the value of guaranteed premiums. Guaranteed whole life and universal life insurance policies provide a stable platform for chronic illness benefits, and regardless of the policyholder’s future, someone will benefit from the policy sold.

Meaningful Chronic Illness or Long Term Care Benefits
HIPAA (§7702b) benefit qualification is the gold standard for long term support services. However, some chronic illness benefits (§101g) allow for qualification that operates as a “kissing cousin” to §7702b. Either type provides predictable and meaningful long term support service benefits to the policyholder without unknowns. Advisors beware of policies offering no-cost benefits: There is still no such thing as a free lunch.

Chronic Illness benefits For All levels of Care and to Family Members
In today’s world, indemnity benefits are highly valued. With §101g plans, after claims qualification, the policyholder can expect a steady stream of monthly payments as long as they continue to need care. Like §7702b plans, annual requalification is required. Importantly, there’s no need for the client to submit receipts for services rendered and no restrictions on who can be paid.

Residual Benefits for Final Expense
One of the primary reasons mid-market consumers purchase life insurance is to provide their families with a final expense fund at their death. Many life combo products provide a residual death benefit for this purpose.

Simple Application and Policy Fulfillment Process
Online and drop-ticket technology has become ubiquitous in our industry. Limiting the need for body fluids, paramedical exams and attending physician statements for faster issue is the new frontier for quality life combo products. This process reduces policy approval, issue and commission payment times into the 10-day range. This is a huge boon to agents and advisors that sell over the phone or through screen-sharing technology, and will greatly simplify the sales process even when you meet a client in your office.

One More Important Item
Life combo policies using §101g language do not require agents to take the eight-hour long term care certification course every two years. However, expect carriers using §101g to have a prerequisite for online product-specific training.

The Elephant in the Room
Traditional long term care insurance failed to achieve market acceptance largely because many agents and financial advisors were hesitant to talk to their clients about the risk or the solutions. Traditional policies can be complex and difficult to explain to consumers. Customer objections and involved underwriting made it easy for brokers and advisors to move on to easier and more profitable products. Will simplified and more straightforward combo products motivate producers, including life, annuity, investment, Medicare supplement, health, and property and casualty, to take another shot at addressing this issue with their clients?

We have an opportunity to make an important difference in the lives of our customers and their families. I have observed the suffering caused by an extended care event to those without the extra $2,000 per month to make a difference in the choice and quality of care. This has informed me that most consumers, provided with the right information and solutions, will choose to protect themselves. It’s up to the insurance industry, agents, and advisors to tell the story and provide the answers.

Old Dogs, New Tricks And Young Pups

2018 has been a different kind of year for Ron Hagelman and myself. Having totally failed at retirement, we’re in full consultancy mode working on projects that involve expanding long term care planning in two sorely-needed areas: 1) The mid-market; and, 2) Those who failed to adequately plan. Over the past 18-months, Steve Howard has been kind enough to publish my articles on these topics, (March, October and November 2017, and July 2018) so I won’t rehash those details.

Today I’ll share some of what I’ve learned and a vision of the path forward. I’m writing this article as I wait for a flight at Houston International Airport. So far this year I’ve flown 55 segments on American Airlines, and by the time you read this, I’ll have added at least six more. I’ve enjoyed working with many of our BGA friends and their agents in ways none thought of two years ago: Helping consumers cope with the long term care planning challenges they face.

Old Dogs and Old Ways of Thinking
The old ways of thinking about long term care planning and the products we use has gone full circle. When I first looked at traditional long term care insurance in the mid-1980s, it was designed to be a supplemental benefit. Generally tied to Medicare definitions and benefit triggers, it covered the gaps with limited benefits. Coverage broadened as consumer/agent demand increased and state regulators loaded on mandates. With HIPAA, long term care insurance moved aggressively from gap coverage to a full-blown asset protection estate conservation vehicle.

Don’t get me wrong, I was in the vanguard of this movement. Lifetime benefits, five percent compound inflation, limited-pay and tax-deductible premiums were my mantra for over 20 years. Bigger was better, and it worked well until the wheels came off the actuarial underpinnings of pricing. Slowly but surely, traditional long term care insurance started looking like the Black Knight in the much-loved Monty Python and the Holy Grail movie—parts (benefits) started falling off, but few wanted to accept that the game had changed.

The “cover the whole risk” mentality caused us to lose sight of the middle class and, in the end, we likely sold too much coverage to too few people. Please don’t misunderstand: Consumers who purchased those great 10-pay policies are very happy. They see their annual statements with $400+/day benefits growing annually and they have peace of mind. Those with annual-pay policies are struggling with cost increases, but at least they generally have good coverage and options to adjust premiums.

Today this leaves us with two choices: Keep flogging the big benefit approach or start thinking about how to create supplemental dollars to combine with other resources at claim time so people can receive the private care they need and want. The latter path is the correct one if we want to expand the long term care planning marketplace. It doesn’t mean that traditional LTCI is a dead letter, it just means that advisors and consumers need to get out of the old mindset, consider all options, and realize that something at time of claim is much better than nothing.

The other general theme coming into view is revolutionary, not evolutionary. We now can help consumers who are at the point of need. Never have we had an opportunity to help those already receiving care, bridge the gap between their income and the cost of care, and/or to “fence” the opened-ended hemorrhage of a family legacy; but more on this in a bit.

New Tricks
Life insurance policies with long term care or chronic illness riders are clearly the rage in our industry. Slap a 101(g) or 7702(b) on that old buggy and we’ve got a wiz banger, right? Well, sort of. Far be it from me to lecture seasoned life insurance professionals, but let’s remember there are always cost-to-benefit considerations in purchasing insurance.

Nothing is free and there are no panaceas. Sometimes a traditional policy is still more cost-effective than a combo, or a blend of combo and traditional may best suit a consumer’s pocketbook and future needs. Also, as a September 21, 2018, Wall Street Journal article about 1980s universal life policies reminded us, guarantees are important and it’s always better to under-promise and over-perform.

Allow me to move onto a topic that is related to my American Airlines Frequent Flier program. As I outlined in my July, 2018, Broker World article, we’ve been managing a demonstration project in Texas designed to test market the feasibility of Point-of-Need Care Funding. We’ve taken two tracks: With the help of several BGA colleagues in DFW and Austin, we’ve trained about 20 agents to work with assisted living facilities in their areas. The idea is to help consumers who failed to adequately plan for long term care. We are making steady progress toward replicating a model that is already successful in the United Kingdom, helping families and care communities find funds for care at the time of immediate need.

Additionally, we’re discovering agents that have existing clients and families struggling to pay for their own or a loved one’s long term care. The key is to provide advice and counsel on the best ways to stretch existing resources to make a known amount of money last an unknown amount of time. Sometimes merely asking a Boomer client if they are in the midst of a long term care event, or acting as power of attorney for someone receiving care, creates the opportunity for an advisor (and their BGA) to become a hero.

In many cases this is about saving a legacy. When I was a mere sprout in the life insurance business our “capital needs analysis” training called for a simple question: Do you plan to receive an inheritance? According to a 2014 report by Life Happens,1 76 percent of Americans expect a family inheritance to fund all or part of their retirement plans. However, according to an HSBC survey, only 56 percent of Americans expect to leave an inheritance with an average total of $177,000. Clearly, a divergence of expectations exits.

The Life Happens article enumerates a sad fact:

“While many Americans expect to leave an inheritance, there are many variables that may prevent this from happening. Older people often face unexpected hurdles and may require the money themselves to fund other things such as medical and nursing care in later life and, with increased life expectancy, they may outlive their income.”

With this in mind, many Boomers and Millennials2 expecting to live on their parent’s largess may be sorely disappointed. A recent online New Retirement3 article shares a number of “coping” mechanisms for seniors who are struggling to leave an inheritance for their loved ones. Of course, we all know that many people fail to plan for inheritance-destroying events. They and their family members discover, at the point of need, that their hoped-for legacy can evaporate as they struggle to pay for the long term care they can’t do without.

Many Americans who survive to age 65 can expect to need and use LTSS (Long Term Services and Support)—our estimates suggest this will be true for approximately half the population…. The average cost of this care is $138,000. However, a number of people can expect to need LTSS for many years and to have care costs that total hundreds of thousands of dollars.

— U.S. Department of Health & Human Services, February, 2016.

Can insurance agents and financial advisors help stop the bleed even after an unplanned need for long term care arises? Absolutely—by understanding how point-of-need care funding works and how they can make it an integral part of their insurance practice.

Young Pups
Those of us who came through the agent recruiting and training processes of the 1970s often worry about the future of our industry. We commiserate that fewer new agents are coming through the ranks to take our places. Over the past few months, however, I’ve had the opportunity to meet late-wave GenXer’s and early-wave Millennials who want to work with clients face-to-face to help them with their insurance and financial planning needs. There may not be as many of these “young pups” coming into the business as in our day, but with technology, hard work and our help, they can succeed in serving the current and next generations’ insurance needs. Please take every opportunity to mentor these young folks by sharing what you know and being a great coach. This will be our legacy to the future of our industry and our country.

Here’s wishing you all a happy and healthy holiday season.