Don Levin, JD, MPA, CLF, CSA, LTCP, CLTC

Benjamin Franklin, the venerable inventor, statesman and intrepid leader, once said, “If you fail to plan, you are planning to fail!”

Much the same can be said for the general populace and their attitude toward long term care and estate planning; nobody plans to fail, but they often fail to plan. As producers and advisors, 70 percent of those with whom we will come into contact will require some degree of long term care at the end of their lives. For single women this figure is 79 percent, and for married couples, fully 90 percent of them will be touched by this need in their lives. The question therefore is not whether it will happen, but to what degree will they have structured their estate plan to deal with this contingency. 

By definition, long term care is required when an individual is no longer able to perform two or more of the activities of daily living (bathing, toileting, dressing, eating, transferring, and continence) or suffers some form of cognitive impairment. This impairment can be organic in nature (Alzheimer’s, dementia, Parkinson’s) or non-organic (traumatic brain injuries, depression, behavioral).  

Back in the day, our grandparents, and even some of our parents, would rely on the old 40-40-40-40 method of retirement. They would work 40 hours a week for the same company over a career of 40 years, and subsequently retire on 40 percent of their pension, clasping a $40 watch as they walked out the door. They were the same people who retired with a paid off mortgage, virtually no debt, and savings in the bank. Today, it is not uncommon to find recently retired members of Society with newly re-financed thirty year mortgages, and carrying a fair amount of consumer credit card debt. These same people may have retired early, started drawing a reduced amount of social security, with no real consideration of just how long their retirement funds will carry them into the future. 

Previously for our 40-40-40-40 crowd, adding Social Security as a windfall, estate planning merely meant having a will to divvy up the house and whatever personal property was left after both Dad and Mom had passed on. Those days are long gone as pensions and even defined benefit plans, are becoming endangered species. Fortunately for subsequent generations, retirement and estate planning are terms bandied about by people as young as in their 30s. 

Further muddying the waters of retirement planning are the facts that we are living longer as a society and dying slower. Advances in medical science, pharmaceuticals, and life style lessons have all largely contributed to an ever aging society. In Japan, more adult diapers are now sold annually than their infant counterparts. Contrary to public misconception, Social Security was never meant to be the primary means of support for retirees. At its inception, the average life expectancy was 63, with benefits beginning at age 65. Today the average life expectancy is 81. At the beginning in 1935, there were 16 workers contributing to the fund for every one beneficiary drawing benefits. Now it is slightly under three to one.  

For all of these reasons, it is imperative that the client and the estate planner remember that long term care insurance is for the living, life insurance is for the dead.With the average retiree looking at an average of twenty five to thirty years in retirement, the goals are very much about ensuring that they don’t outlive their money and about estate preservation.  

With the release of the new iPhone X, I am reminded of the fact that nobody knew that they wanted an iPhone or an iPad or an iPod until Steve Jobs told them that they wanted one. Likewise, many people today remain completely unaware of the tsunami that lurks over the horizon and could potentially ravage their estate plan if the specter of long term care has not been afforded appropriate attention.

Simply stated, some variation of long term care insurance (LTCI) has to be part of every balanced and responsible estate plan. Some may construe that as a biased statement given that I find myself immersed in the long term care insurance industry—having joined it in 1999. 

Current occupation aside, I should note that in a previous life I was a general practice attorney at law. Quite often a residential real estate sale would lead to my preparing wills for the new homeowners.  Never mind that they had two, three, or four children for whom an estate plan would have been deemed critical. Unfortunately, for a lot of folks, it was only that deed of title that prompted them to change their thinking or raise their awareness and take the leap into some form of estate planning. 

As the attorney of record, my charge was to be concerned about the “what ifs” associated with estate planning—to wit: Guardians, trustees, executors, conservators, successors to those roles, medical and durable powers of attorney, living wills, and other aspects that address that “what if” the client dies. I remember a bit of an epiphany when I was sitting at my computer drafting one such set of documents and I found myself with the dilemma of what if the client does not die? What if they are merely disabled or find their lives turned upside down and inside out with an illness, chronic condition, or accident that raises the dark specter of long term care? Who will provide the care? Where will the money come from? What will be the consequences of a void not filled with a bona fide LTCI policy? This was both sobering and fright-filled, because the documents I was drafting and to which I was boldly affixing “prepared by:” were intended to address a myriad of scenarios. As a result of that harsh reality check, I embarked on a journey to learn about long term care insurance. I spoke with insurance producers who largely knew very little about it, estate planners and wealth managers who knew even less, and finally stumbled into an office of long term care insurance planning specialists. And the rest, as we say, is history. 

Fast forward several years, and it is now the year 2000. As a recovering attorney, and now fledgling LTCI regional sales manager, I am now regularly meeting with attorneys and financial advisors networking with them in an attempt to bring the protection that LTCI affords to all of their clients. Everyone recognized the need for life insurance (liquidity, taxes, and/or the enlarging the corpus of the estate) in estate planning—so why wasn’t LTCI playing a more prominent role in estate planning? That was both the question and challenge, and set me on the path of educating and raising awareness for the past seventeen years. 

The challenge was that the very idea of providing, or needing, care was a completely foreign thought that never occurred to many advisors. Fortunately that situation has changed, and despite the near 80 per cent slump in stand-alone long term care insurance from its peak of $1 billion in 2002 to last year’s $200 million of sales, more advisors are stepping up and addressing this need with the use of other hybrid and combo products that are built on either a life insurance or annuity chassis. 

So what occurred to prompt this seemingly seismic change within the financial services community? It was probably several things. 

From the perspective of the advisor it was growing awareness that as a fiduciary they had a duty to their client, and the client could in fact unduly rely on the advice that the practitioner did or did not render unto them. Bottom line: If a devastating illness, accident, or chronic condition forced the liquidation of the estate in the absence of a LTCI policy, courts were finding in favor of plaintiffs, be they children or other surviving heirs, at an alarming rate. So, future liability was a growing concern.

Second, the livelihood of these financial advisors, particularly wealth managers, is dependent upon the income and commissions generated by assets under management. An ever shrinking estate being ravaged by long term care costs became a growing area of concern. The negativity of this cause and effect could also prompt other (healthy) family members who are clients to move their assets to other more “progressive” advisors, forcing an even greater hemorrhaging of lost assets under management and annual income. 

It would be unfair if we didn’t also recognize that a good number of advisors did have their clients’ best interests at heart, and wanted to do something to preclude this tragic scenario from coming to pass. For these well intentioned advisors it made perfect sense to bring in a specialist like me, or one of my agents, to help construct this critical aspect of the estate plan. 

The other argument for forming this win-win-win strategic alliance with financial advisors and wealth managers  and for becoming their specialist resource for LTCI is that many advisors don’t know how to talk to their clients about the specter of long term care. More than a dollars and cents issue, there is an emotional component that most long term care planning specialists have experienced first-hand with their own family members. The vast majority of LTCI producers have either been caregivers, or been exposed to the disorienting dynamics of having a family member living in their home (or in a facility) where they themselves have to spend regular time as a care manager.

Since 1996, the federal government, in concert with their state government counterparts, have made it quite clear that they want to privatize long term care in this country. First came the incentives associated with tax qualified plans, State Partnership, ever rising annual deductions for premiums paid offered by the IRS, as well as the level of tax-free long term care benefits—$360 per day ($10,800 per 30-day month). The level of tax-free benefits is not changing from 2017 to 2018.

Why does the government want everyone to embrace long term care insurance as a step toward self-reliance?  Because the budgetary red ink that is drowning nearly every state’s largest line item, Medicaid, is only getting deeper and darker, especially as the Baby Boomer generation continues its journey into retirement, Social Security, and Required Minimum Distributions. Talk to any legislator who is involved in budgetary issues and they will have to confess to a fear of the devastation that this generation could do to the budget if all are forced to turn to the state for assistance with their long term care.   

Based on industry and consumer research, the typical LTCI buyer looks like this, and the similarity to the average estate planning client cannot be clearer: 

• Average age 55.
• Slightly more women than men apply (51 percent female, 49 percent male).
• Married with adult children.
• Working in a white-collar profession; not yet retired.
• College educated.
• Living in a metropolitan area with a population of at least 250,000.
• A homeowner with 11 or more years in the current residence.
• Affluent; upper middle class with a household income of $100,000 or more.
• A “planner” who is interested in financial issues; owns life insurance and other conservative investment products.
• Family oriented.
• Exposed to long term care issues; knows someone (a family member or friend) who has needed long term care services.
• Research oriented; an online user; self-educated about LTCI. 

As a practitioner, my recommendations for a family are that the same average client should desire:

• For their families to be part of the plan, not to be the plan.
• That their family members act merely as care managers rather than caregivers.
• Not to exhaust their financial legacy; and,
• Not to outlive their estates and subsequently become a burden on family, friends, or society.

Consider a simple example of long term care’s potential impact on the estate of any client. The Genworth 2017 Cost of Care Survey reports that the current national median expense of a private nursing home room is $267 per day or $97,455 per year, an amount that’s been increasing by about four to five percent annually for the past five years. If the client is currently age 55 and first requires that level of care in 30 years at age 85, the first year’s cost will be about $390,000 (at five percent annual inflation). Multiplied to reflect a four-year plan of care without any additional cost increases, the total cost could exceed $1,560,000 – a staggering amount. 

For this reason, long term care insurance simply makes good sense. Very modest premiums, with slowly adjusting premiums, and the ability to “re-size” or tailor the inflation protection rider, makes this a great way to leverage your client’s estate. There is not an investment vehicle that can deliver a rate of return comparable to the value associated with a LTCI policy. As a producer, nothing thrills me more than when I can design a shared plan for a couple where the annual premium for both members of the couple equates to the monthly benefit derived for just one of them, or as I like to pose it to them, “Would you rather write that check once per year, or once or twice a month?” The realization on their part is gratifying, and genuinely motivates me to get up in the morning. 

There are a lot more options for addressing long term care concerns than there were years ago, ranging from traditional stand-alone LTCI policies, to life insurance policies with a long term care benefit rider, or even annuities with a long term care benefit rider. In addition to LTCI,  wealthy clients may even consider more sophisticated options that include buying and owning a life insurance policy with a long term care benefit through an irrevocable life insurance trust (ILIT), allowing them to further leverage financial benefits. While many of my peers recommended these vehicles, I liked to keep things as simple as possible. The mechanics can be somewhat complicated and cumbersome since it works best when the long term care benefits are paid on an indemnity basis rather than a reimbursement. (Note: Most, if not all, traditional plans are now reimbursement plans so they can qualify for tax-qualified status with the federal government.)

Over the years we have heard the term “land rich, cash poor,” and typically equate it to historical figures like George Washington and Thomas Jefferson. It is just as applicable today and should prompt planners to review the structure of their clients’ portfolios to determine whether they have the liquidity with which to deal with a long term care crisis, or whether a LTCI policy would prevent needless, and often times expensive, liquidation of a portfolio or assets under less than desirable market conditions.

Steve Jobs once wrote, “You can’t connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something—your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.” 

As estate planners, attorneys, insurance producers, and other financial professionals with a fiduciary duty to our clients, we must step up and be there to assist our clients to connect the dots in a future direction and to integrate long term care into their estate plan. 

From the time that I myself was only knee high to a grasshopper, I was captivated by the wit and witticisms of Mark Twain. Known for Tom Sawyer and Huckleberry Finn, he was also a world traveler who favored Europe and would write about these adventures as well. World-renowned at the time of his death in 1910, his writings and wry pieces of advice and observations of life live on into yet a third century and countless generations of readers. 

What does Mark Twain have to do with the long term care insurance industry? Everything. 

It is not hard for me to imagine him on stage at ILTCI or another industry conference, clad in a white suit, his luxurious white hair askew as he puffs on a cigar and utters something such as “Like rumors of my own demise, the rumors regarding the death of the long term care insurance industry are greatly exaggerated.”

As for me, in the course of my regular business day I often speak with dozens of people. These days, particularly if they have reached out to me, I attempt to listen more than I speak and to really hear what they are attempting to say to me.  More often than not when the topic of the lack of LTCI sales rolls around, there are myriad myths, rationales, and distortions—or what I call “rocks”—that these people would presumably love to free themselves of and leave on my desk. As much as possible I refuse delivery because I already have my own box of rocks with which I am dealing, and because I firmly believe that they are all wrong! I want to take this opportunity to address some of these erroneous paradigms and to allow Mr. Twain to weigh in as well.

Clear as day, traditional, stand-alone long term care insurance (LTCI) is going away…
Traditional, stand-alone LTCI is clearly not going away. If anything, there has been a resurgence in the sale of LTCI since financial advisors, estate planning attorneys, and other insurance producers now view it as the “alternative to the alternative” hybrid and combo products that often require great infusions of cash in order to fund the policy and less remaining assets under management (AUM) upon which they derive a livelihood. They really like us now!

“It has been reported that I was seriously ill—it was another man; dying—it was another man; dead—the other man again… As far as I can see, nothing remains to be reported, except that I have become a foreigner. When you hear it, don’t you believe it. And don’t take the trouble to deny it. Merely just raise the American flag on our house in Hartford and let it talk.” —Letter to Frank E. Bliss, 11/4/1897

I cannot think of a more dangerous and self-destructive paradigm for a producer to possess about this invaluable, life-altering product. Our ability to tailor a plan to fit the needs, the wants, as well as the budget of the LTCI-seeking client is unparalleled. 

“Better to keep your mouth shut and appear stupid than to open it and remove all doubt.” – Mark Twain

Everybody is getting out of the long term care insurance business.
Sure, some of the carriers have pulled a disappearing act again, but at the same time other carriers are broadening their footprint and offering new and unique products that are attractive to a wider range of client. 

It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt. 

I am detecting a pattern on how Mr. Twain feels about the doubters.

The carriers are raising the underwriting bar and making it increasingly difficult for me to find coverage for my clients.
Certainly underwriting standards have been raised for fear that adverse selection will negatively impact the pool of policyholders, but at the same time the move towards fewer underwriting requirements, i.e. less Attending Physician Statements (APS), has actually made it easier to get applicants approved. It is also great that we have a wide array of LTCI-related products that we can offer these hard to insure clients. E-apps are also making it faster to process through the system as we avoid Not-in-Good-Order (NIGOs) and this in turn leads to better placement!

“Courage is resistance to fear, mastery of fear, not absence of fear.” – Mark Twain.

“A lie can travel half way around the world while the truth is putting on its shoes.” – Mark Twain

I am still experiencing push back from clients that paying premiums for a lifetime with nothing to show for it is a waste of money, not to mention which there is so much negative press about the ongoing  inforce rate actions.
Like other forms of insurance, LTCI is still an exercise in risk mitigation. Nobody ever complains about living their entire life without filing a claim for a house that has not burned down or a car that they never totaled.  Yet, in this case, where the odds of needing care for a couple are an incredible 90 percent, they push back. Clearly this is ignorance – defined as a lack of knowledge. Or denial. Once we educate them, they are no longer ignorant. Sometimes we just have to accept the fact that we cannot overcome well-grounded denial or… something worse. I would certainly hope that if there was a forecast that included a 90 percent probability of rain that they would grab their umbrella. 

There is no doubt that the need for long term care and its accompanying insurance continues to grow at pandemic levels, especially in terms of cognitive impairment, as we continue to live longer lives. New Return of Premium riders are also attempting to address this perceived shortfall in the coverage, as are Single Pay and Ten-Pay offerings.

“Age is an issue of mind over matter. If you don’t mind, it doesn’t matter.” – Mark Twain

Denial is rampant and I am frustrated at attempting to get people to drink the Kool-Aid.
It has always astounded me at how deep denial can run. Even in the face of years and years of statistics and logical argument, if a potential client does not believe that it can happen to him, they are not going to buy our product. It is also painful to us because of the knowledge we have and the insights into what their lives can become in the absence of this protection. Keep the Faith.  

“The man who does not read has no advantage over the man who cannot read.” – Mark Twain

“I have never let my schooling interfere with my education.” – Mark Twain

Selling LTCI is getting harder and harder because people simply don’t want to hear about it.
It is about serving our clients with the utmost of professionalism, product knowledge, and with total integrity. 

“If it’s your job to eat a frog, it’s best to do it first thing in the morning. And If it’s your job to eat two frogs, it’s best to eat the biggest one first.”–Mark Twain

“The secret of getting ahead is getting started.” – Mark Twain

People don’t trust that we will deliver on our promises.
As long term care advocates, it is important to remember: “Character is the architect of achievements.” This involves our becoming the face of the policy and selling the difference (ourselves) from the moment we first begin to speak with them.

“Always do right. This will gratify some people and astonish the rest.” – Mark Twain

The LTCI business is harder because of higher premiums that people flat out don’t want to pay.
“You can’t depend on your eyes when your imagination is out of focus.” – Mark Twain

The keys to success in this business are belief and activity. In fact, 90 percent of this business is belief and the other half is activity. Ours is a very simple business: “call people, see people, help people.” It is simple, but not easy. If it were easy, there would be ten thousand producers offering LTCI, and we would not be earning the compensation we are for our efforts. The key is to not get discouraged, and to remember that we are attempting to live a life of significance.

“Don’t go around saying the world owes you a living. The world owes you nothing. It was here first.” – Mark Twain

“A man’s character may be learned from the adjectives which he habitually uses in conversation.” – Mark Twain

I love what I do, and it often breaks my heart when I cannot find a product solution for someone who really wants the coverage. I’ve also been told by several people whom I respect that I would be better served to find another area of specialization because LTCI will not be with us much longer and that I am wasting my time.
Just as we have to deal with ignorance and denial from clients, it is still prevalent among advisors and other producers. To this we would say,

“Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” – Mark Twain

“Kindness is the language which the deaf can hear and the blind can see.” – Mark Twain

Sometimes it is hard for me to pick up the phone and make the calls I need to make, or to face another “day of drudgery in the trenches.”
I still remember the excitement with which I began my LTCI career some nineteen years ago, and realize that it is still the reason that I get up every morning and approach my desk with such enthusiasm and belief that I am going to do some good today for somebody who needs me to do it. I believe that LTCI remains a great and viable business. The opportunity has not diminished in the slightest and for the most part is greater today than it was when I began my career—if for no other reason than there are fewer of us in the business! More for those of us who have endured…

“Twenty years from now you will be more disappointed by the things that you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.” – Mark Twain 

Last week I received a host of congratulatory LinkedIn messages on my first “anniversary” as an MGA. I must admit to all reading this missive that I had to ask my staff and family what anniversary I was being congratulated on because the date meant nothing to me until my son explained that it was on June 21 of last year that we had updated my LinkedIn profile to reflect our change in agency status. Who knew? Half the time I am lucky to even find my Facebook or LinkedIn page! 

These messages in turn prompted me to become reflective and think about what this entire Captive GA / Independent MGA dichotomy is all about, leading to a whole series of thoughts that I now feel compelled to share as we continue to examine the ongoing downward trend of the traditional long term care insurance industry and attempt to ascertain why it has gone from a billion dollar annual industry to a mere shadow of that figure. A few months ago I espoused a number of hard facts and figures put forth by LIMRA and the carriers (and cited various and sundry other reasons), and only negligibly touched on what I think has become a pandemic issue: The Casual Producer.

Who or what is the casual producer you may ask? Well, he or she is likely one of the hundreds of faceless names on an agency roster that may contribute premium when either the mood strikes or the opportunity presents itself. Imagine my chagrin when at my first National Long Term Care Network (NLTCN) meeting I was told by another long-established member that they have “three to four hundred names on our roster of agents, and any given (good) week we will have fifteen submit business.” I think a few of my brain cells died that day when some of my circuitry overheated. Shoot, I was used to a system where an agency of thirty agents would have fifteen producing, and the dream week (which happened more than a few times for me over the years) was when all of them would submit business in a given week. I always hated the “one-hitters” when all but one would write, because I felt terrible for that agent and would often attempt an assist at the end of the week if we were in a position to predict the ultimate outcome.   

So how did we (yes, the dreaded imperial “we” that spouses often like to utilize with us) end up in this current situation? A single word: accountability. Or more accurately, the lack of accountability. I was speaking with my operations director who actually sparked this article when she (erroneously, I believe) stated that agents have too much freedom. I told her not to confuse freedom with a lack of accountability. In my book, freedom needs to be earned. What is missing now is accountability. We can re-establish it if Compliance would allow us to utilize activity logs or a one card system or convince the agents that these are tools that they can voluntarily employ as a best practice and a coaching tool for their leadership team.

I am finding that the casual producer is also guilty of missing the mark on other “have to’s” which should include attending agency meetings, training calls and carrier webinars. In the absence of these activities, the casual producer only falls further out of touch. I fondly remember the days when attendance could be mandated if product training was being conducted.

I used to recruit agents to the old captive model by pointing out that they would be their own boss, run their own shop, and be a true independent contractor, entitled to four weeks of vacation per year because that is what people who earn six-figure incomes are usually entitled. I stopped doing that several years ago, tempering my remarks with how this freedom and liberal work/holiday schedule only came after becoming established in the business. It was at this time that I adopted the Three C’s model of leadership with new agents. While new and enduring their learning curve I became a cop, and required them to check in with me frequently. Once they had achieved validation, I became a coach, helping them to complete their first one hundred appointments during which they should see everything, hear everything, earn the t-shirt, and frame it for the wall. When they were achieving production standards I became a consultant, committed to helping them take their game to the next level—ideally that of MDRT and leading producer. The best advice I received as a new attorney was “take care of your practice and it will take care of you; ignore it, and it won’t be there for you when you want it.” That was sage advice then, and is equally applicable today for the casual producer.

Another new belief that I am fostering is that a lack of demonstrated commitment to maintaining accountability is tantamount to an admission of a lack of true entrepreneurship on the part of the producer—and poor agent selection on our part. We have to own part of this problem. As I have heard several GAMA International speakers so articulately express it, “If we hire them we owe them, because they are entrusting their livelihoods to us.” The corollary I would add is that we can’t want it more than they want it for themselves and their families, so it is not all on us.

For many years, there have been two questions that plagued me: How does a thermos work, and what do (captive) agents do with their time? I have since learned that the answer to the first question is that it’s a vacuum. It has been suggested to me that the answer to the second question may very well be the same as the first. In the absence of any accountability, the casual producer often squanders our greatest single and finite resource: Time. Parenthetically, the third question that still confounds me is: Why does it take people so long to board and get settled on an airplane? But we digress.

Without sounding the knell of condemnation of any individual or the industry as a whole, I must admit that the term “casual producer” does nothing but make me cringe, nearly as much as fingernails on a blackboard. I have spent way too much time worrying about these people and their families. How does the casual producer survive going weeks and weeks without submitted business? In the absence of a book of business spinning off renewals, or the benefit of a gainfully employed spouse, how do they do it? Why do they do it? What do they know that I don’t? Maybe I should become a casual MGA! 

As a full time producer I wrote business every single week. I even had production credit the weeks that I was employed by the company as a contract trainer which provided me both with a pay check and constructive production credit for purposes of trip qualification, by running an evening appointment or when I was on vacation by leaving a full slate of appointments for other agents to run and to split commissions with me.

In hindsight, I recognize that I was the exception and not the rule. Maybe it is because words like discipline, diligence, and accountability mean something to me.  I know that my self-respect and integrity required it. Monday was the best day to write business because it set the tone for the week. The only thing better was to write over the weekend and to carry it over into Monday. If not Monday, then Tuesday. By Wednesday, I was growling. By Thursday the dog was hiding for fear of being kicked, and by Friday morning, I was looking at potential “B-back” appointments not previously closed, and was very much a self-acknowledged ‘bastardo’ on the prowl for anything to submit because my personal value system would not tolerate a zero in production next to my name on the call-in sheet, especially once I had become a second tier leader. My wife tells me that I was at best extraordinary, more likely just weird in my zeal to achieve in this manner. But, I will say that there were other agents who felt as I did: most of them however earned monikers such as “President’s Club Member,” “Leading Producer,” and never Casual Producer. Hmmm, could there be a correlation between accountability and success?

Our five children may have complained about the household rules that we had for them as they were growing up, but ultimately every single one of them acknowledged at some time, either as teenagers or college students, that they found comfort and security in these rules and the structure that they provided. Interesting.  

After 23 years of military service, 13 years as a practicing attorney, 16 years in the captive agency world, and now one eye-opening year in the independent brokerage world, I realize that like my children, I too like structure, rules, and accountability. It makes life so much easier to deal with on a daily and weekly basis. I find that I miss it especially on Monday morning, for in spite of any success enjoyed the previous week I have that same feeling of vulnerability that most sales leaders experience as we start a new week. I now fly completely blind as to upcoming activity level and until I see the first production of the new week. For in the old captive days we heard from agents on Monday when they updated their activity for the upcoming week and reported any weekend production; on Wednesday with mid-week reports; and on Fridays when we would do the happy dance and tabulate the week’s production. By Monday noon I would know my agents’ appointment count for the week, and could extrapolate to within a few thousand dollars or percentage points our anticipated weekly production; now we hear nothing on Monday or Wednesday, and quite often Friday is like waiting for the lottery numbers to be announced. 

Maybe I am Alex in Wonderland and just looking down the wrong rabbit hole. But most definitely, in the absence of rules, contract minimums, reporting requirements, and accountability of any kind, the inmates are running the asylum, and this, more than anything else, will ultimately be the demise of our industry. If performance improves when it is measured, what happens when we stop measuring it? Maybe it’s time to end casual time, and put on a coat and tie again and go back to work as Committed Producers. 

We have a tremendous opportunity in front of us as the market keeps growing faster than we can serve it, as Baby Boomers and succeeding generations discover their long term care needs, and we now have additional products with which to tailor a solution for our clients. The key to success in this environment is commitment to our craft (i.e. product knowledge), to activity (seeing the people and marketing), and in our beliefs. With these elements in congruence, there is no doubt that success is inevitable for the committed producer. 

A very common thing to do in the face of adversity or even the simplest forms of change is to regress and fall into the lament “remember the old days when…” Well, it has been a year since I began my odyssey from the role of captive general agent to independent BGA. Wow. What a year of change and transition it has been! I feel much like the little worm that has crawled out of the radish into the shiny red apple to discover just how sweet life can be!

Just yesterday I was on a fact finding appointment with one of my agents, speaking with a dentist, when I realized, and actually shared with both of them, the very fact that a year ago we would be having a much different conversation; the range of products and carriers that we could offer to our clients then was dramatically smaller and limited in scope. So, while some changes are easier than others to embrace, I for one celebrate our move to independence and recognize that with it came the ability to better serve our clients. 

We now have all the tools we need to be able to help virtually everyone with whom we meet! 

However, no matter how much things change, there are certain things that always remain the same. A few of these truths include:

• This business is 90 percent beliefs and the other half activity. 

• Your belief system needs to be intact before you even think about encouraging paradigm shifts in clients.

• You have to see the people in order to help the people. 

• Leads are merely the tip of the spear. 

• It is all about need… as well as urgency and value when it comes to a long term care sale.  Without a solid first key agreement and the establishment of need, do not proceed. 

• It is all about listening to the client. Selling has never been achieved by telling.

• It is all about the client. A client-centric mindset will always work out best for them, for you, and for the companies you represent.

• It’s all about putting the client’s best foot forward by doing solid field underwriting, writing letters to the underwriter, and portraying them as the three-dimensional people you met with rather than the one-dimensional paper file of application and medical records. 

• Avoid submitting “garbage apps” or “dual apps”–neither one serves anyone a good purpose. Clients don’t obtain the protection they want. You don’t make any money–remember, you only get paid on what places and achieve nothing but a reputation for submitting garbage. And the carriers lose because of the ancillary costs associated with poor placement rates. 

• This industry remains the best “get rich slow scheme” around.

So let’s talk about the “good old days.”
Some would say they were “good” because company-generated direct mail leads were plentiful and it was almost like dropping a line in the waters of a fish farm where it was nearly impossible not to catch something.  Others would say these were good old days because the presence of these leads required no marketing on the part of the agent. “Smile and dial” pretty much described an agent’s day if he was not on a selling appointment. 

For those who remember those days with fondness, I would point out that my recollection of those days as an agent, district manager, regional sales manager, and even as a divisional vice president, included plenty of moaning and groaning and teeth gnashing about the quality and quantity of the leads. On more than one occasion I heard comments such as “these leads stink” or “I don’t have enough leads—I am unemployed.” I never heard comments like those from agents who were being intentional on generating their own leads thru marketing, networking, and prospecting, and incidentally earning twice as much money when AGB was worth twice the commission earned from either a broad market or endorsement lead.

These same leads often required hours and hours of dashboard time, and often left an agent feeling like the world was conspiring against him when he was “porched” on occasion, making the drive back even longer! I can honestly say that I was never porched by a referral or networking client, because of the significance they attached to these appointments.

Bottom line: the “good old days” are gone, and I for one am not sad to see them go. With greater awareness in the marketplace because of personal experiences with long term care from aging parents, a greater array of products to carry as arrows in my quiver, and the market continuing to expand quicker than we can serve it, I for one believe that for those that embrace the new culture of selling long term care products that better days, if not our very best days, lie ahead.  

For those who don’t know who Joe DiMaggio was before he was the spokesman for Mr. Coffee, Joe D. was nicknamed “Joltin’ Joe” and “The Yankee Clipper,” and played his entire 13-year Major League Baseball career for the New York Yankees. He is best known for his 56-game hitting streak during the 1941 season, a record that still stands today.  I always liken his streak to that of our agents submitting written business every week – a feat not easily attained.

DiMaggio was a three-time Most Valuable Player, and an All-Star each of his 13 seasons. During his tenure with the Yankees, the club won ten American League pennants and nine World Series championships. The man was a champion, and despite missing a couple of seasons due to service in the Army during WWII, he returned to baseball and picked up exactly where he had left off without missing a beat. Joe was inducted into the Baseball Hall of Fame at Cooperstown, NY, in 1955, and was voted the sport’s greatest living player in a poll taken during the baseball centennial year of 1969. Despite passing away in 1999 there is still an impressive website honoring him that you can visit.

For the past seventeen years I have been a part of the long term care insurance industry. I joined it after a 13-year career as a general practice attorney. Since making the transition, I have enjoyed many roles in our industry, and have remained a faithful student of our business. In those seventeen years I have truly seen the good, the bad, and the ugly. I have had the pleasure of being named a Leading Producer as a career agent, district manager, regional sales manager, and divisional vce president. I have experienced the highs of our industry when it was genuinely fun to be in the business, and lived through some really bad times. Some might say that we are living in one of those bad times again, and I would say…you’re wrong! This is not a bad time to be in the long term care insurance industry— if you are truly in the industry. For years, my agents have heard me say that this business is “90 percent belief and the other half is activity.” It was true when I said it for the first time in 2000, and no less so today! It all starts with whether you are in or out – there is no more maybe.

Fact: (see chart 1) According to LIMRA statistics, the LTCI industry has contracted about 80 percent in sales over a five year period. The naysayers are proclaiming this the death spiral of the industry. My answer: Not! We heard that 2004 was the tail end of a two year death spiral and it clearly was not.

Yes, the industry is down that much in traditional LTCI sales, but there is quite a logical explanation for this phenomena which dosen’t impact our ability to be successful in this business in 2016.

Chronology:
• For many years after its inception in 1974, the long term care insurance industry was on a meteoric path in terms of sales and policies issued, with the top carriers shattering sales records year after year. When I first joined GE Financial, we were GE Chairman Jack Welch’s darlings—a cash cow to corporate, and achieving 45 percent year over year growth. It was nothing short of amazing, and quite easy to maintain a swagger when we walked.

• In the 1990’s, long term care insurance was, by and large, a product sold by internal career shops comprised of specialists; advisors and brokers largely gave us a wide berth.

• Case in point—for many years the GE Financial/Genworth team of agents was heralded as the greatest career LTCI sales force in the industry bar none. In its hey-day, the 1500 career agents of this shop would produce $180 million in annual sales, with brokerage contributing a negligible amount. Parenthetically, the President’s Club of 10-15 agents would produce $5-10 million annually by itself.

• This very talented career sales force would produce 40 percent of the industry sales generated annually. This sales force is largely gone now.

• The LTCI industry was once producing over $500 million dollars in annual premium, largely thru the efforts of career agents.

• Many of the top carriers have divested themselves of their career shops, or ceased new sales, or folded their tents and/or crept away into the night, in some cases in a state of insolvency.

• Anecdotally, the brokerage channel is full of “casual” LTCI producers who are becoming even more casual in their efforts to position this product alongside their other primary, mainstream products. 

So how did the industry end up where we are today?
• Reports indicate that in 2002 there were over 750,000 new LTCI policies issued to consumers; in 2014 this number had shrunk to only 131,000 new policies, but…there were also 91,000 hybrid and combo products that were purchased as a means by which to address the long term care conundrum. Consumers and advisors were clearly embracing alternate strategies!

• Agents began realizing that the (direct mail) lead machines maintained by these carriers for the exclusive benefit of their career agents were not producing the same quantity or quality of leads, and soon most of these carriers began charging for these leads. The allure of free leads, albeit with lower commissions, lost some of its luster, and agents then began to leave career for the brokerage/independent channel and significantly higher commissions associated with becoming independent and entrepreneurial. A good number of agents were not successful in this transition for a variety of reasons. Career sales fell while brokerage sales began to climb proportionally until the pendulum had swung near completely to the other side—but overall, sales continued to fall industry-wide.

• Age and attrition. These natural forces have taken an enormous toll and ravaged this once proud industry of producers. When I think about the number of President’s Club, Platinum, and Diamond agents I personally know that are no longer producing, the list is staggering as is the sheer amount of production that they accounted for each year.

• Lack of recruiting. Coupled with age and attrition, the lack of recruiting of fresh younger talent has had an even more severe impact on the industry. Proselyting or the practice of “musical chairs” is not now, nor has it ever been, the same as honest recruiting. Stealing agents from one another is not growth, but merely stagnation and kicking the can down the road.

• As a footnote, our current agency was one of the few within the system that did grow…and in the right way. It grew primarily on the basis of training, mentoring, and oh yes, the recruiting of fresh talent new to the industry. In fact, our agency grew as some $1 million (or about 20 percent) of our traditional LTCI production came from agents new to the industry in 2012-2014. 

The market is still there!
• Contrary to reports, the market is still there. As Mark Twain once said, “the reports of my death have been greatly exaggerated.” 

• The Baby Boomers who were our sweet spot as they turned 65 at the rate of 10,000 per day are still here but are now turning 70 at this same rate. They are largely retired or retiring, and unlike their parents are doing so with mortgages still in place, fewer forms of pensions and guaranteed lifetime incomes, with the prospect of living longer and potentially outliving their money. The risk of outliving their money goes up dramatically particularly if they have not addressed the potential ramifications of long term care and if they are part of a married couple or civil union—where the odds jump to 70 percent that one of them is going into care!

• The need is greater than ever! The costs associated with home care, assisted living facilities and skilled nursing facilities have all steadily risen over the years—nearly tripling in the time that I have been in the industry. What was once a $40,000 annual cost is now topping out in excess of $119,000, making self-insurance an untenable alternative.These expenses threaten our country like never before in our history. More women in the workplace and fewer children in the family (oftentimes scattered across the country) greatly reduces caregiver options in terms of family. Government entitlement programs are drowning in red ink, fueling even more challenges to Society.

• While premiums have risen, on balance, the ability with which consumers can leverage their personal resources still makes LTCI a tremendous bargain… if the agent has harnessed need, created urgency, and demonstrated the value inherent to being a policyholder. As noted above, costs have nearly tripled—why should we expect that the insurance which will protect us from this scourge will not also rise in cost? Put another way, why does LTC insurance cost more than say an average term life insurance policy? Because the expectation on the part of the insurance company is that there is a 70 percent certainty of paying out on the LTCI policy, whereas only 2 percent of term life policies ever go to claim. Why are car insurance premiums more expensive than homeowner’s policies? Because there is a five times greater risk of you filing a claim on your auto insurance.

So why aren’t the fish biting?
All of that aside, why aren’t consumers flocking to those of us left in the industry? Why aren’t we all up to our ears in applications and illustrations? According to members of the ever contracting agent force from whom I have solicited input:

• There is an incredible void in the education and awareness campaigns that should be ongoing by the carriers and the states. The advent of partnership and subsequent mail campaigns by state governors was an incredibly successful and fruitful partnership that generated revenue for carriers and agents and reduced the potential burden on state Medicaid systems.  Why has it been allowed to virtually disappear?

• The carriers have largely ceased to promote the long term care insurance product. Gone are the days when we were being reminded about the ever present danger associated with the ravages of long term care with a variety of mass media offerings ranging from print, radio, and television commercials.

• Denial is still strong! Whether it is the heart of the consumer or that of their trusted advisor, the attitude of “this won’t happen to me” still resonates, largely due to ignorance. Our challenge is to educate them so that they are no longer ignorant or lacking knowledge—so that they can then make an informed decision on the proper course of action.

• Due to changes in basic economics, the average American family has less disposable income today than it did four years ago. Now more than ever it is all about prioritizing.

• Most consumers and more than a few advisors would also cite “financial instability” in the marketplace leading many people to maintain the dreaded and often fatal “wait and see” mindset. 

• “People won’t answer the phone or respond to my mailings.”

• “It’s just plain harder to sell it these days.”

You decide which of these bullet points are legitimate concerns or simply excuses…

The Math:  So where did the market disappear to over the years? It didn’t go anywhere! It is still here if you look for it. The lake is still full of fish but there are far fewer fishermen on the pier or in boats with poles in the water—thus less fish on ice in the market!

• 30 percent of the fishermen were lost when the GEFA/Genworth team largely eroded and finally disappeared, though remnants of the team are still in the industry but with other carriers and brokerages.

• 40 percent of consumers are purchasing hybrid and combination (non-traditional) policies to address this need in their lives.

• 10 percent is attributable to age and attrition—which is continuing to ravage the industry sales force and is only going to continue to accelerate. 

• 5 percent is due to the number of financial advisors, attorneys, and other insurance professionals who may have previously put their toes in the water only to pull them back out due to a change in product offerings that served to make the product even more “complicated” to understand, much less position for a sale to their clients.

The result is that the market is still there, but there are far fewer boats on the water offering our products to the public. I don’t view this as a problem, but rather as an opportunity and call to action!

The Solution: You!
If you are truly in the game, with your own lines in the water, you can be as successful as you wish. If you want to sit on the pier and drop a line or two into the water, you can do that and deem that success. If you want to go trawling for the big albacore, you can do that as well—but to do so you have to a) have a boat, b) go where the fish are biting, and c) throw the chum into the water to create that very same feeding frenzy we used to enjoy years ago. These activities require time, patience, diligence and discipline.  

• Build your brand. The public, professionals, and your centers of influence need to know that you are there and how you can provide them with assistance. People in your local market, or even remotely, need to associate you with your product portfolio.

• While building your brand, simultaneously engage in consumer education and awareness. The public needs us and our products but won’t purchase them until they discover the need within themselves, couple it with the fervor of urgency, and you have demonstrated the value associated with being a policyholder.

• It is no longer about direct mail leads – it is now all about marketing, networking and prospecting. In exchange for these efforts, most carriers are now paying the agent more than twice the commission of a previously captive agent. Work your existing book of business, turn your clients into centers of influence, and be deliberate in working both your warm and target markets. Marketing is not an event, but rather a way of life for the true fisherman entrepreneur.

Required Carrier Actions:
For the industry to survive and flourish, carriers must:

• Bring to the marketplace websites, tools and electronic applications (e-apps) as well as develop processes to include underwriting and policy issuance that are both streamlined and agent friendly.

• Commit to developing cycle times that allow (new) producers to get paid in a timely manner, e.g. in ten days, not ten weeks. Being paid 60-90 days after submission causes otherwise quality producers to wither on the vine, even in the presence of regular production, as it is all about cash flow and survivability. Where possible, carriers need to work with agencies to foster an environment into which new agents can be recruited, e.g. a draw or new agent bonus program similar in nature to the “financing” that their financial counterparts can offer their new candidates.

• Move into the 21st century—eliminate as much paper as possible, and automate the policy issuance through the cloud.

• Invest in the education and awareness of the general public and financial service and insurance professionals with branding and educational campaigns—this can’t all fall to the shoulders of the agencies and agents.

• Intensify governmental relations efforts to promulgate legislation that will allow consumers and employers to utilize qualified (retirement) funds for the purchase of this critically needed insurance. Premium deductions and credits are useless if there are no funds with which to make the purchase! Failure to change the manner in which prospective policyholders can fund their purchases will further erode the purchase of these products, lead to the subsequent dissipation of these (qualified retirement) funds on said care, and/or cause a rise in Medicaid filings and the ultimate collapse of these systems.

Required Agency Actions:
Agency owners and managing partners must shoulder their share of the burden by:

• Investing in infrastructure—training, marketing, recruiting, technology, case management.

• Recruiting, recruiting, recruiting of new agent talent and second-tier leadership development. What would the impact be to the industry if every agency successfully launched just one new agent to partner with a veteran agent? How much new business would be written? For the true agency leader recruiting is not an event but rather a lifestyle!

• Training agents in how to position both carriers and product offerings in this new age.

• Training in how to create lakes in which to fish and generate sales for themselves. Providing leads was analogous to feeding our agents one day at a time; if we teach our agents how to fish we will feed them for a lifetime.

• Leading the marketing efforts within the agency and fostering relationships with professionals that create selling opportunities (not just leads or introductions) for agents.

• Providing training in how to complete the fact finding and home interview against the backdrop of  remote / virtual sales—unlike the old days when this was a kitchen table industry, last year some 40 percent of the market purchased this product from an agent or carrier not physically present in their home.

• Providing co-op funding for marketing efforts with agents to promote local branding.

• Working with industry organizations, e.g. NLTCN, NAIA, NAIFA, GAMA International, etc. and carriers to support strong lobbying efforts in Congress and state capitals. 

Charting a new course in familiar waters:
One of my favorite movies is Forrest Gump. A large number have seen it, and most will recall that Forrest’s newly acquired wealth came from the Bubba Gump Shrimp Company, which made it big when all of the shrimping boats were wiped out in a Gulf Coast hurricane, leaving Forrest and his boat the Jenny as the last remaining boat on the water and the only one capable of hauling in the catch. With the vast number of agents, agencies and carriers no longer on the water, this is our time to shine and to land a big catch!

The question is: are you ready to go fishing again? We’ll teach you how, we’ll provide you the rod and reel, and even some great bait, but we can’t put the line in the water for you— that is completely up to you.

Conclusion(s):
• I remain in this industry with guarded optimism that we can rebuild it through a solid partnership between agent, agency and carrier, as well as industry organizations working with federal and state government agencies.

• This business can, and must, survive and flourish again. It all begins with each and every one of us doing that which is required to insure that the public receives the education and awareness necessary for informed decisions to be made and policies to be purchased.

• Federal and state regulators are coming around to appreciate the significance of a strong and vibrant LTCI industry and the inherent risk to the general public if we are not successful—and for these reasons are granting in-force rate actions and generally providing a more receptive ear to the industry. 

• Marketing, networking and prospecting is fun if you do it right!

• For fear of further accusations of being the ever optimist, I really do believe that fewer poles in the water should mean that we all catch more than our previous share; the fish are hungry (though they may not know it), so it is incumbent upon us to insure that the bait is in the water to attract them.

• We now have reached a point where the quality of our current agents must offset the former quantity of selling agents.

We all have the opportunity to be the next Joltin’ Joe of the Long Term Care Insurance Industry if we get our lines back into the water!