Larry Nisenson

Helping Producers Help Their Clients Age On Their Own Terms
As we live longer and the cost of long term care continues its upward trajectory, the need for long term care financing solutions has never been greater.  Add to that the historically low level of retirement savings and it doesn’t take long to see the financial tsunami heading our way.

With more than 40 years of experience, we remain committed to helping consumers solve the financial challenges of aging and helping brokers and financial professionals articulate and solve for this issue with their clients.  It’s what we focus on every day at Genworth.  It’s personal for us, because we’re all someone’s son or daughter.  Many of us, including myself, have been there, experiencing first-hand the joys and challenges of caregiving.  We know what could have made it easier, and we want nothing less for our policyholders and their families.  

Our partnerships are a key part in helping solve this issue. That’s why we continually look for ways to enhance our relationships with producers and, just as important, to enhance producers’ relationships with their clients.

We do that in a number of ways:  Research that sizes the need; products that provide a spectrum of solutions; advocacy for regulatory and legislative reform to make long term care insurance more accessible; technology that compresses the underwriting process; and, most important, exceptional service to policyholders when they need it the most—at the time of claim.

Sizing the Need
Each year, for the past 14 years, we’ve underwritten the Genworth Cost of Care Survey, which has become the go-to resource on the cost of long term care for consumers, producers and the media.  Our Cost of Care app and interactive website provide producers with dynamic tools to help their clients understand the costs of care in hundreds of cities across the country, as well as project the cost of care into the future.  This year, our survey found that the annual median cost of long term care services increased an average of 4.5 percent from 2016 to 2017, the second-highest year-over-year increase for nursing homes and home care since the study began in 2004.¹

Product Innovation
Only 7.2 million people owned long term care insurance in 2014,² which is less than 10 percent of the 108 million people in the U.S. over the age of 50.³  This illustrates the gaping need and huge opportunity that exists to provide products that can help consumers along the entire spectrum of needs.  

Long term care insurance—both individual and group–has been and continues to be one of Genworth’s core solutions to meet the financial challenges of aging.  We offer the ability to purchase a smaller, simpler policy to a much more comprehensive policy designed to meet a range of needs and budgets.  Our group solution offers portable coverage and the option for relatives of employees, including spouses, parents, grandparents and adult children, to take advantage of the group pricing even if the employee chooses not to enroll.  

For older Americans who did not plan ahead, or could not qualify for long term care insurance and now find themselves in immediate need of care, we offer our Income Assurance Immediate Need Annuity, a medically underwritten SPIA.  This annuity provides guaranteed monthly income for the rest of the care recipient’s life and can be used to help pay for long term care or any other expense.

In 2018 we will broaden our portfolio to include a single premium deferred annuity.  This annuity will have a free withdrawal provision that could be used to help fund a long term care insurance policy.  It will also include a medical care facility waiver that, when a person is confined to a medical care facility, would allow for a one-time 50 percent free withdrawal to help cover out-of-pocket long term care or other expenses.  

Regulatory and Legislative Reform
As the carrier with the largest in-force block of long term care insurance business, we are leveraging our extensive experience to influence regulatory change that will help make long term care funding a reality for more Americans. Specifically, we are proposing a new regulatory framework for new policies that provides for annual and early single-digit adjustments (up or down) to premiums as needed, similar to the way other lines of insurance, such as health care, are rated.  This would result in smaller, more frequent adjustments of premiums (up or down), which would minimize the need for large, unpredictable premium increases in the future and be easier for regulators, carriers and policyholders to manage.

We are also supportive of incentives proposed by public policy groups to make long term care funding options more accessible to consumers. Some of these proposals include allowing penalty-free withdrawals from retirement accounts to purchase lower-cost long term care insurance products, providing incentives for employers to offer limited-benefit long term care insurance through workplace retirement plans on an opt-out basis, and a universal catastrophic plan to pay for longer duration care as a backstop to private insurance.

Speeding Application to Delivery 
We have made and continue to make significant investments in tools and technology to provide a superior experience for our distribution partners, producers and consumers.  To simplify and expedite new long term care insurance applications and increase producer efficiency, we recently launched our eSuite of new business tools–an end-to-end electronic process that reduces cycle time by 20 days.  Producers using the eSuite of tools have found it provides a simpler, expedited sales experience that is easy to navigate. It also brings convenience and efficiency to producers who work remotely, or do not live near their clients, through the ability to share screens.  

Compassionate, Competent Client Service
We are at our best when your clients need us most.  Our dedicated employees understand how challenging a long term care situation can be, and their goal is to make the claims experience as smooth as possible.

In short, we want to be an ally for people as they age and for those who love them. Whether protecting our customers through an insurance product, a cash accumulation product or a service that provides timely support, we are passionate about helping people age on their own terms.  We also believe in the brokerage general agent (BGA) model and look forward to working with our distribution partners to help their clients better prepare, so that, if they do need care, they will have the luxury of choosing the right caregiving solution for them and accessing those solutions with ease.  [LN]

1. Genworth 2017 Cost of Care Survey, September 2017.
2. The State of Long Term Care Insurance:  the Market, Challenges and Future Innovation, National Association of Insurance Commissioners and the Center for Insurance Policy and Research, May 2016
3. Getting to Know Americans Age 50+, (Based on 2014 Census Projections), AARP.

Not having enough money to pay for long term care is the greatest fear Americans have about aging, according to a recent consumer survey conducted by Genworth.¹  Even so, only one in five has taken any action to prepare for the financial challenges of aging.  

That sense of complacency, as financial professionals know only too well, can have devastating consequences.

When families who haven’t planned ahead for long term care are suddenly faced with a loved one needing immediate care, the financial implications can come as a shock—particularly when they realize that Medicare doesn’t cover the care they need or they have too many assets to qualify for Medicaid.

Although not as many funding options exist at that point, there is a solution that financial professionals should be aware of that uniquely addresses the long term care financing needs of older people with adverse health conditions.  

It’s called a medically underwritten single premium annuity (SPIA) and converts assets into guaranteed, monthly income that begins immediately and is paid for the rest of the care recipient’s life.  The income can be used for any purpose, including long term care, medical or living expenses.

The medically underwritten SPIA is designed for older Americans in poor health. In fact, precisely because it is medically underwritten, this type of SPIA may generate a larger monthly payment than a traditional SPIA if the care recipient is less healthy and needs care at the time he or she purchases the SPIA.  The purpose of the underwriting is not to exclude anyone, but rather to determine the amount of income the care recipient will receive based on his or her age and health.

Depending on the carrier, the underwriting process may include a review of medical records and an in-person nurse assessment of the applicant’s health.  Lab tests are not always required.  As a consumer protection safeguard, a carrier may require a power of attorney to purchase the product if there is any evidence of cognitive impairment.  

Although a medically underwritten SPIA can be used to pay for care, it should not be confused with a long term care insurance product.  There are several key differences between a medically underwritten SPIA and long term care insurance.  First of all, the guaranteed income from the SPIA is not tied to activities of daily living (ADLs) as is the case with a long term care insurance policy.  In addition, the SPIA requires no claims to file and no on-going health evaluations. And, unlike long term care insurance which must be used to pay for care, the income from a medically underwritten SPIA can be used for any purpose. 

It is also important to understand that medically underwritten SPIAs are not investment products and do not require any additional fees or charges.

The medically underwritten SPIA may include optional benefits, including enhanced death benefits or cost-of-living adjustments.* Death benefit options are designed to protect a portion of the premium paid into the annuity upon the death of the care recipient.  A cost of living adjustment increases the income payment each year to help offset the potential increase in future living expenses which could occur, for example, if the recipient requires more intensive care and must move to a more expensive care facility.

In addition to providing care recipients a guaranteed source of income they cannot outlive, a medically underwritten SPIA can help alleviate the financial strain of caregiving on families.  Family members can, in fact, pool their resources to pay for the single premium needed to purchase the medically underwritten SPIA. 

While a medically underwritten SPIA cannot solve all of the long term care challenges our country faces, it does help provide a potential solution for a segment of consumers who need care now but have limited funding options.

It’s an innovative use of annuities and underwriting that helps people who are afraid of outliving their savings extend their assets.  It creates a guaranteed stream of income, that can be used for any purpose, for as long as they live. 

*Optional features, such as an enhanced death benefit or cost of living adjustment increase may be available and may require additional premium to provide the same guaranteed initial monthly income payment.

Features and benefits may vary by insurance carrier, state or market. All guarantees are based on the claims-paying ability of the issuing insurance company. Consult the annuity contract for a detailed description of benefits, limitations and restrictions for each individual product.  The contract terms and provisions will prevail.  

The purchase of this type of product may impact Medicaid benefit eligibility or other requirements for Medicaid benefits or any other state or federal government assistance.

Life income provides guaranteed monthly payments during the lifetime of the annuitant, no matter how long he or she lives.  Monthly income payments will generally stop upon the death of the annuitant and, therefore, the total amount of payments may be significantly less than the premium paid for the annuity.  There may be no minimum amount of guaranteed income payments or death benefit associated with the product selected.

Reference:
Genworth Long Term Care Omnibus Study, September 2017.