Ronald R. Hagelman

A rose is a rose is a rose.
    — Gertrude Stein, “Sacred Emily,” 1913

Simply using a name can invoke the imagery and emotions associated with the name. There are immutable universal concepts in the world. Therefore, chronic illness is chronic illness is chronic illness. It’s the absence of the rose or the absence of chronic illness risk leveraging that demands our conceptual attention. I don’t care what you do to try to abrogate the risk exposure. I am, however, incensed when you ignore the problem.

When the dust settles, insurance professionals are really only concerned about what actions their clients choose not to take. My primary mission in every sales conversation is to explain what it means to not take advantage of my wise counsel.

Let me make this absolutely clear: Insurance professionals have a fiduciary responsibility, political mandate and ethical obligation to provide long term care risk leveraging alternatives.

This is simply one party no agent can afford to miss. The theme of the party is chronic illness. The term “chronic illness” is usually applied to illness lasting longer than three months—which, of course, defines benefit eligibility under HIPAA tax-qualified LTC insurance policies. Benefit eligibility is further defined under HIPAA as the inability to perform two of six activities of daily living as well as cognitive impairment. This basic definition is the primary ingredient of all chronic illness (LTC) insurance options.

As predicted, product alternatives are continuing to expand and proliferate. Life insurance combo policies now include single premium whole life and single premium universal life; level pay universal life with monthly expense charges; and level pay universal life without any current cost with expenses ultimately deducted out of benefit payments. Now, these rear-end load “living benefit” policies also include term life options. Combo annuities appear in two forms: account values plus a long term care benefit, and account values with an LTC insurance “kicker”—or multiplier of benefits (i.e., three times the account value).

Choices in the individual stand-alone LTC insurance market have also expanded: smaller policies, reduced inflation protection strategies and co-insurance alternatives provide something for everyone.

Which product or combination of products attempts to solve the risk exposure is not nearly as important as the commitment to do something (anything) to protect your client.

Multi-life continues to take advantage of “actively at work” underwriting philosophies, and spreading the risk thresholds can help many more with mild impairments acquire coverage.

In the final analysis all of these products equal one universal concept. The names don’t matter, only what they really are and what actions you take to use them to solve your client’s problem.

“A rose by any other name would smell as sweet.” William Shakespeare, Romeo and Juliet.

Other than that I have no opinion on the subject.

Severe optimism remains the favorite affliction of LTC insurance professionals. (This column has provided an ample supply of encouragement.) The LTC insurance industry now has two years of substantial premium growth, yet we are of course not out of the swamp—there remains a number of large and unpredictable alligators in our chosen swamp. Perhaps outing these lurking “carnivores” will remove some of the fear and mystery surrounding their sightings by innocent bystanders.

Carrier retreat has become a serious structural problem. Both companies and ratings agencies have acquired a negative outlook on LTC insurance, particularly in terms of individual standalone sales. Once upon a time there were more than 100 companies offering coverage; today the numbers have dwindled. Hopefully the limited risk of combo policies in conjunction with recent sales success will bring more companies back into the market.

Just like life insurance, perhaps the most significant component of successfully pricing LTC insurance is long term investment. Flat interest rates fueling virtually non-existent traditional investment returns have plagued LTC insurance companies without any apparent cure; thus, they need to explore more aggressive investment strategies. Combo policies again provide new opportunities for a more balanced risk approach.

The CLASS Act is not dead, only wounded. It was finally recognized as severely flawed and terminally impaired. However, depending on future political influences, a CLASS Act zombie could easily reappear, feeding on the flesh of mandated employer participation. According to a report by the U.S. Congress’ bicameral Repeal CLASS Working Group in “CLASS’ Untold Story: Taxpayers, Employers and States on the Hook for Flawed Entitlement Program,” (September 2011), the government knew CLASS was an unsustainable program ultimately dependent on government subsidy. Politics kept it alive and staggering forward for 18 months before pending implementation plans were put on hold. Re-animation remains a real possibility.

The Genetic Information Nondiscrimina­tion Act of 2008 (GINA), as currently interpreted by the Department of Health and Human Services (HHS), has proposed that the prohibition of releasing genetic information be extended to LTC insurance. Thus, any knowledge of cognitive predisposition would be intentionally hidden from prospective insurers. Cataclysmic adverse selection could occur as a result, literally imploding LTC insurance pricing and generating another exodus stampede of LTC insurance companies. As was the case with the CLASS Act, educational efforts are being made to inform HHS of the potential hazards of this course of action.

There are regulatory obstacles put forth by the National Association of Insurance Commissioners (NAIC) and numerous state insurance commissions that create serious impediments to building smaller policies and innovative combo plans with annuities. Work is ongoing to enlighten and focus regulators on additional consumer-friendly alternatives.

The Nature Channel revealed that alligators can hold their breath under water for very long periods of time before surfacing right under unsuspecting prey with fairly horrific results. This should not prevent us from enjoying water sports or the comfort of alligator boots. Vigilance in the face of adversity has always been the source of my persistent optimism.

Other than that I have no opinion on the subject.

After previewing the preliminary third quarter LIMRA annualized LTC insurance figures, I must say that by any measure the industry is experiencing the best new premium production in almost a decade. This is grand, spectacular news!

The new numbers are amazing and historic. They will cause an incredible volume of speculation. The growth was dramatic across all lines of business. Combo sales in particular will now continue to transform the product landscape. Agencies and carriers that have ignored or decided to wait and see what the implications of the Pension Protection Act are, need to fall back and regroup immediately.

Amazingly, there will be a plethora of possible answers from inside and outside our industry. Yet the only ones who really know the truth are the veterans, specialists, marketing organizations and hard-core companies dedicated to LTC insurance.

There really is no one answer. During the last eight years all of the answers have appeared in this column. Therefore, one more time for posterity, let’s go over them.

1. Turmoil in the market with carrier retreats and departures last year meant that a significant portion of existing premium production had to find a new home. Activity in the brokerage market, regardless of its source, generates new premium.

2. The rising bombardment of care-­giving events is becoming a cosmic asteroid shower from which there is no place left to hide.

3. Economic adversity and the almost lethal blows of 401(k) evaporation over the last four years have focused everyone’s attention on preserving retirement equity.

4. Demographics is destiny: Boomers are indeed beginning to retire or finally contemplate the inevitability of reduced cash flow, increased longevity and looming inflation.

5. There cannot be anyone left who seriously believes the government is now in a position to increase and expand the social safety net. Even those middle class opportunists that may have used subterfuge to “borrow” from Medicaid will soon find the cupboard bare. I remain absolutely, positively sure that those with money will take action to protect their money.

6. Needed structural innovations have also contributed to a more competitive and easily explained product. Product simplification, reduced benefit pools and competitive interest rate strategies have made it easier to explain what we sell. Alternative premium strategies with reduced benefits have helped to buffer sticker shock.

7. Multi-life sales are still booming; some insurance is better than no insurance. Spreading the risk has also allowed us to offer reduced underwriting for mild impairments, allowing many more to acquire some coverage otherwise not available.

8. Expanding combo product options forces the risk leveraging conversation across all product lines. Combo products do dramatically reduce net cost.

9. Every industry survey demonstrates the steady march forward of consumer awareness both individually and at the worksite. Partnership training has also enhanced the number of agents prepared to be helpful.

We, the stalwart supporters of the cause, knew and never lost faith in the absolute certainty that a time would come when our momentum would again stagger forward. A time when LTC needs would become the beginning of a conversation, not the end…an era of established need and known anticipated risk abatement…a consensus when our solutions were mainstream and not peripheral. It begins now!

Other than that I have no opinion on the subject.

What was old may be new again. Unlike men’s ties or the length of women’s skirts, where style seems to recycle itself with historical déjà vu, LTC insurance seems to reinvent itself in a more straight-forward, progressively improved pattern of advancement.

As far as individual LTC insurance sales are concerned, we do appear to learn from our mistakes and consistently build a better product.

Multi-Life LTC insurance is different. HIPAA tells us LTC insurance is health insurance. Therefore, it seems that multi-life LTC insurance should be bought, sold and administered similarly to how health plans have been during the last 30 to 40 years. Of course, this is not exactly what happens.

Almost all primary brokerage carriers have begun to offer small group solutions during the last three years. Each has jumped into the market “pool” without knowledge of water depth or the commitment to get wet. At the same time, there are actuaries who believe it is impossible to escape the gravitational pull of adverse selection and that no level of additional premium or risk spread will allow a reduction of underwriting criteria.

I absolutely disagree with this myopic and short-sighted refusal to engage the marketplace. As a national marketing organization, my company introduced one of the first multi-life programs more than six years ago (The Employees LTC Foundation Plan issued by Loyal American Life). The 2010 LIMRA statistics continue to reflect that worksite marketing efforts are successful. True group, multi-life and association business represented 56 percent of sales, with multi-life showing the greatest strength. The majority of new LTC insurance premium was sold with an affinity discount.

Multi-life marketing is built on several immutable principals:

1. Sufficient participation, which relies on controlled health exemptions and the bedrock—“actively at work” definitions—has always been the successful strategy for employee enrollment.

2. Spreading risk by utilizing a comprehensive marketing approach—including carve-out, core buy-up and corollary sales—contributes to expanded sales. Affinity discounts are provided for spouses and family members; and some companies also offer reduced underwriting for spouses, based on an established participation threshold.

3. Discounted premiums for employees, spouses and family members and limited underwriting are two iron-clad promises all group/multi-life sales always offer.

4. Standard (not preferred) rates and underwriting costs reduced by definition are two additional characteristics that contribute to the success of multi-life LTC insurance products. In addition, the average age of a policyholder is mid-forties, and persistency is influenced by normal employee turnover.

Participation thresholds have increased and gatekeeper questions have been enhanced as companies search for the best blend of marketing finesse and underwriting incentive. More importantly, very few “players” have left the arena and, hopefully, those that left may eventually return.

The marketing environment is what deserves additional emphasis. Opportunity for sales remains enormous—there are several million businesses with fewer than 500 employees. Abbreviated short-form underwriting continues to provide opportunities to offer coverage where none is available in the individual market.

Let’s revisit what makes this sale so exciting and reexamine where we may have gone slightly off course.

What is it that makes the multi-life sale resonate with employers and employees? First there are the tax benefits to employers—dollars spent for employees are 100 percent deductible and devoid of payroll tax. Employees receiving the LTC insurance benefits not only get them free but they also own a policy that pays tax-free benefits. The absolute cheapest pay raise ever!

Utilizing a section 105 medical reimbursement plan allows an employer to choose who gets the benefits, based on any combination of income, length of service or job description. Benefits do not have to be homogeneous, and there are very few limitations or restrictions on the number of employee classes allowed.

Once the decision maker in a corporate setting is made aware of the issues of asset protection and the burden of caregiving, buying opportunities are endless. For the most part human resources personnel should not be the initial contact; they are, in my humble opinion, an anathema to successful sales. They have no direct relationship to any of the decision making variables, and they can contaminate a benefit conversation—comparing LTC insurance to pet insurance and vision care.

The basics of the sale have not changed. Conversations about offering LTC insurance as a benefit almost always originate with the insured, not the agent. Frequently, the perception of the need has arisen internally.

Find the source and you will find the sale. Each case involves a census and determining where to draw the line where the employer cares. Maybe just the owner will have coverage; perhaps the vice presidents, managers, or those who have been with the company ten or more years will be included. (Maybe just the bookkeeper who knows where all the financial skeletons are hidden.) Thus begins the first step—the carve-out.

Unfortunately, the carve-out is far too often the full extent of the sales effort. Carve-out discussions based on the fear of economic loss or a personal experience with the catastrophic impact of caregiving have dominated our sales expectations.

I believe that by taking this approach, only the low hanging fruit has been picked. We need to work harder to liberate the need for protection inherent in every group regardless of size. The next step in the conversation that deserves the greatest attention is the holy grail of successful LTC insurance sales—core benefits. This is the secret that transforms the opportunity to help and unlocks an almost unlimited benefit treasure.

Important Truths
1. Some LTC insurance is indeed better than none. A small amount of insurance dollars can make the difference as to how and under what circumstances clients will receive care. Reality at the time of claim does not have to be based on a choice of 100 percent of your client’s money, 100 percent insurance money, or 100 percent government money. It is more likely to be a little of each. Leverage is leverage.

2. Voluntary enrollments are never successful unless management believes and publicly supports the cause.

3. Knowledge is sales power. Employees must be able to make informed decisions; they need to know exactly what LTC means, how it can directly impact their lives and the basic math of insurance options. In other words, they must understand exactly what it means to not participate in the offered protection.

4. LTC insurance at work is not expensive. Core benefits are now available that provide as little as a one-year benefit, facility only, with average premiums of less than $5.00 per employee per month.

Providing core benefits changes the entire sales conversation. You are no longer asking, “Who wants to buy?” You are instead enhancing an important corporate-provided benefit. The opportunity for employee buy-ups, spousal additions and family sales is limitless.

This is the sales concept that changes everything. Recently a friend who manages a light manufacturing company described his hands-on management skills: “If I can do it, you can do it!”

Employers must understand the bottom line—they must help and lead by example. How can they expect their employees to believe if they do not? That $5 to $20 per month is critical to your ability to succeed.

You are not in the business to see just a few employees to whom you might be able to sell some insurance. You are there to protect as many employees and their families as possible from America’s largest unprotected risk and protect employers from lost productivity caused by caregiving needs. You simply cannot do it alone.

The hard dollar cost is incredibly small and it generates a gigantic difference in your chances to make a real difference in the lives of employees and, at the same time, protect the assets of a company. The employer is going to write off the dollars anyway, and those dollars represent a cost that is substantially less than 1 percent of payroll. No real impact on the bottom line but enormous impact on the lives of employees.

Employers get to be the heroes by helping you help their employees do the right thing—inexpensively. Plus this extremely visible benefit represents a deductible pay raise for all employees with no FICA, no FUTA and no W-2s—plus it even pays tax-free benefit dollars.

Just say NO to purely voluntary conversations and do not let the sales stop at the obvious carve-out. This is the sale that does not just happen, it must be made. This requires the best in us and connects directly with the best in our customers. Go forth and multiply—but do it right!

Other than that I have no opinion on the subject.

My ten-pay policy was recently paid up. It’s a joint, comprehensive benefit policy with indemnity, 5 percent compound inflation and unlimited benefits. At the time of purchase I was very concerned about catastrophic risk. At the center of my benefit selection process was the possibility of that big, lengthy home and institutional event. I wanted to make sure that I had provided a total insurance solution, that I had guaranteed the prevention of a possible scenario that could totally devastate my financial plan.

Our industry has always been attracted to blanket risk protection. A Gestalt insurance solution is, after all, a predictable, finite and specific response to a known quantity of risk. We have done an exceptional job of quantifying the potential size of the problem and providing fairly robust insurance alternatives. We do have a policy that can directly confront a potentially drastic and dire outcome. The problem of course is that not enough Americans can afford it.

Recently, I had a total knee replacement. As is sometimes the case, rehabilitation has been slow and frustrating. Both the acute medical procedure and the sub-acute rehabilitation are predictable—ultimately providing anticipated improvement in my mobility and quality of life. Unlike a LTC insurance event, I am 100 percent sure my situation will improve.

This unanticipated down time has provided me with a true opportunity to reflect. In many ways I have had a close call with the meaning of custodial dependency. For a number of weeks I could not perform a number of instrumental activities of daily living (IADLs) and activities of daily living (ADLs). My beautiful and saintly wife has experienced an early dress rehearsal of the burden of 24-hour caregiving.

After release from the hospital I was also given the choice of going to a skilled nursing/physical therapy facility for a one-week stay, or going home and having several home visits per week. I had previously toured the nursing homes in my small town, so I chose to go home, placing an additional burden on my family. The entire experience has caused me to again ask some basic structural questions.

How much insurance is enough?

Have we adequately provided for the initial front end trauma experienced at the beginning of the claim process?

How many dollars are really needed to help maintain personal control of the claim process?

How much is needed to remove concerns about imposing on family members?

How much indemnification is really needed to allow sufficient time to prepare and plan for a known claim onslaught?

Incidence of claim has always been a little confusing. An often quoted source comes from an analysis done in 2005-2006, “Long Term Care Over an Uncertain Future; What Can Current Retirees Expect?” (Peter Kemper, Harriet L. Komisar, Lisa Alecxih, Inquiry, 42: 335-350). This popular research is based on the loss of one or more ADLs, four IADLs and any LTC service received after sub-acute care under Medicare.

After 65, 31 percent will never require care, 17 percent will need care for less than one year, 12 percent for 1 to 2 years, 20 percent for 2 to 5 years, and 20 percent for more than 5 years. These numbers were basically confirmed by the 2011 Genworth Claims Analysis, which indicated that 44 percent of their claims lasted less than one year. Those claims that lasted more than one year had an average duration of 3.9 years, and 14 percent would last more than 5 years.

The bottom line is in today’s dollars a $100,000 pool of money would cover 60 to 70 percent of anticipated claims.

I’m just not sure we are asking the right questions. There remain several underdeveloped markets. There needs to be a more confident approach to selling smaller benefit policies that intentionally address those issues most dear to consumers:

Freedom of choice about where and from whom we receive care.

Personal control of caregiving alternatives.

Peace of mind that planning will address real and immediate caregiving issues.

There needs to be a more precise focus on what happens at the beginning of the claim process. What can be done to alleviate the shock of a new and often sudden disability? There are new responses to this concern coming to market offering LTC insurance light—short term LTC insurance or what might be best described as LTC supplement policies.

A number of companies are now offering one year benefits, managed care support services, reduced percentages for assisted living, and early cash “transition” benefits. Although there are still some regulatory prejudices against policies with less than a two-year benefit, this is a significant development.

Selling less benefit to many more members of the working middle class is critical to the survival of our industry and perhaps the very stability of our national financial well being. It seems logical that these newer, more affordable benefits will continue to have increasing traction at the worksite.

Targeting smaller, more affordable solutions to the specifics of the problem (particularly if policy issue is faster) seems to be an obvious formula for greater sales success. If we could just focus on the human pressure points that can best be alleviated by simply applying money—money that buys time to think, plan and adjust to new realities. Many of us are just not comfortable with or confident in government programs; however, a well-built and flexible Medicaid supplement policy (for those who need it)—perhaps as an intentional enhancement for the partnership program—may have much more merit than I originally thought.

Other than that I have no opinion on the subject.

It’s not just about who you know, it’s about how well you know them. The sale of LTC insurance is never an arm’s length transaction. It’s up close and personal.

At a recent pre-enrollment meeting for a large hospital, the human resources director asked the perfect introduction question: “What can we do to make this a successful enrollment?”

My response—as sincere and firm as I could say it—was: “We need to make absolutely sure everyone who works at this hospital understands exactly what it means to not participate in the new benefit offering!” Then I gently explained that LTC insurance is very different from other benefits—it is not just an either/or proposition, nor is it just a question of do I want this or not—which is exactly why a separate, stand-alone enrollment is necessary.

“We have to be able to explain what long term care insurance is and what it is not. We need to be able to clarify that it is not just for the old. We need to be able to illustrate what it means in each employee’s personal life. We need to be able to demonstrate that waiting is bad planning and that inflation is not their friend. Most importantly, we need the opportunity to clearly outline why LTC insurance really is not expensive.

“Every employee must have a chance to understand the true value proposition of LTC insurance in order to make an informed decision to protect themselves and their families—or not.

“We are entering new territory together. Once you offer LTC insurance—especially on a purely voluntary basis—the product in and of itself may generate some fiduciary issues. Specifically, if LTC insurance is offered in the context of an opportunity to protect estate assets, it would not be unusual to assume that heirs might look to see if you did a good job of clarifying the importance of this opportunity to protect their parent’s retirement assets.”

It’s all about access. Producers must have firm guidelines for potential voluntary cases before they start a sale. From my experience, these guidelines need to be engraved in platinum—rigid, fixed and immutable.

Communicating directly with all employees multiple times is an absolute necessity. There must be mandatory employee meetings, and subsequent individual enrollments must take place at work during business hours. Producers must also be allowed to provide a statement for signature when an employee opts out or declines coverage. Every employee must be required to formally turn down discounted premiums and simplified underwriting or, at the very least, confront the reality of their decision by signing and dating a declination form.

If these minimum requirements are not met, respectfully decline to be a part of the sale. Although there are circumstances in which you may bend the rules, the outcome of your flexibility must be predictable.

Success in multi-life and group LTC insurance sales is based on access to the final decision makers. They will decide where in the employee census they are going to draw a line. They may only want coverage for themselves; however, everyone who makes a difference at the company should be included—even if they are provided only a small “core” benefit incentive. And don’t forget to reiterate that LTC insurance coverage of this type requires no FICA tax, Federal Unemployment Tax, or W-2s, plus it is fully deductible for employees and spouses.

All initial conversations about multi-life and group LTC insurance must be primarily about access. Someone wants LTC insurance or at least wants to kick the tires. Wonderful, you should talk about the potential opportunity.

However, before you go too far in the sales process, you need to ask: “What is the marketing plan?” And what you need to know is: What access to employees will you be allowed to have? How many ways can you communicate? Who will personally make the sale, complete the educational campaign and take the applications?

If you do not have access, no one is helped. If you are not going to be allowed to help…walk away.

Access is everything!

Other than that I have no opinion on the subject.

Last fall we experienced serious attrition at the provider level. The total effect of dramatic and substantial rate increases and carrier exits meant that approximately 25 percent of premium written in 2010 was thrown into jeopardy.

Most predictions were of a dire nature. The traditional gnashing of teeth and wringing of hands dominated conversations. Many of us answered too many calls asking if this was the end. To my knowledge no one predicted what has happened.

First we ended 2010 with the first serious increase in production in many years. New sales were up almost 14 percent (according to LIMRA) from the previous year, breaking the $500 million of new premium mark again. Plus the remaining committed LTCI professionals have experienced unprecedented first quarter growth in new sales—accounting for the $125 million that had to land somewhere.

What also needs to be mentioned is that growth in sales has been greater than just the relocation of existing production levels. First quarter 2011 sales were up another 11.6 percent!

Many of us have had to fall back and regroup: reviewing our clients’ options, learning about new products, examining our marketing priorities, and evaluating how to handle rate increases on both old and new premium. This increase in focus has created new premium—activity alone breeds production.

When many may have thought our world was collapsing, in reality it experienced a spring of rebirth, renewal and refreshed dedication. The theory being offered is basic organic chemistry and Newtonian physics: molecules in motion generate friction and heat.

Unrelenting rate increases brought on by accumulating claims experience and ongoing medical inflation are finally creating a new sense of urgency! Even the most obtuse can see there is a perfect storm forming just offshore caused by a product that experiences virtually no lapses except death and boomer demographics.

• The fastest growing segment of our population—those 85 and older—will increase by 40 percent by 2015.

• Caregiving is unavoidable. Boomers are increasingly involved in issues of dependency where family members are concerned.

• This year boomers begin to turn 65, and by 2030 the entire boomer population will be 65. Longevity issues can no longer be denied.

• LTC insurance claims continue to rise with our industry now paying $4 billion in claims per year.

• The demons of medical inflation cannot be ignored. Genworth’s latest cost of care survey indicates a 5.99 percent growth in the cost of long term care.

An agent called last week and began by saying he had heard me speak on more than one occasion and while he had not been active in LTC insurance sales for a number of years, he was re-evaluating this decision. Apparently he had sold a policy to his father-in-law a decade ago. His father-in-law, now 72, fell while working in his back yard, sustaining serious injuries to his shoulders and back. Because of the extensive rehabilitation necessary, his father-in-law was placed in a skilled care facility, and Medicare paid for the first 90 days of care. After that, his father-in-law’s LTC insurance began indemnity payments of $5,685 per month. He first thanked me and then asked what he could do to rededicate himself to LTC insurance sales.

Maybe, just maybe, what will finally revitalize sales is that there is simply no place left to hide. The cost of long term care and LTC insurance will continue to increase; the benefits which we are able to provide will continue to decrease; and for those with health issues, coverage will become harder and harder to find.

How difficult can it be to ask one simple question: Do you have your LTC insurance plan in place?

Get out your Bunsen burner, throw on your lab coat, and just mix the ingredients in order to provide the catalyst, which will ignite the reaction—molecules in motion will create their own heat.

Other than that I have no opinion on the subject.

Veterans would be the first to testify that combat fatigue is cumulative and that there are certain events more stressful than others. One example is recurring common frustrations.

As a veteran of the “LTC insurance conflict,” my armor has been worn much thinner in places than is safe or prudent due to these recurring common frustrations. Maybe it’s just that patience is not an infinite resource, and my eternal quest for more LTC insurance sales has apparently exhausted my allotment.

The ability to stop and kindly explain one more time the painfully obvious truth about LTC insurance is rapidly evaporating with my advancing age. Thus, readers of this month’s column please proceed with caution, because this month’s commentary may be unusually harsh.

Let’s start at the immutable atomic structural level. If you perceive yourself as an insurance professional, you have a moral, ethical and fiduciary responsibility to try to help mitigate the potential effect of what can certainly become a catastrophic emotional and financial event. You do not get to choose if you wish to be helpful. The notion that you have an option to even offer the possibility of alternate futures is irrational and cowardly. If you are not part of the solution you are the problem.

Every client’s file should be well-documented with long term care refusal forms: when you first offered the product, when you explained the effects of DEFRA 2005 and exposed assets, when you explained your state’s new partnership plan, and when you offered new combo alternatives made possible by the Pension Protection Act. Hopefully somewhere along the line your clients took action to protect themselves and their family. If not, it’s time to review the ongoing adequacy of their decisions.

There are those who falsely believe they can sit this out and ignore their responsibilities. It is not just a rhetorical question to ask, do insurance companies have an obligation to offer help with this blatant risk? Someone recently suggested to me that the only responsibility left at insurance companies is the bottom line for their stockholders—that it’s just about the money! When I finished “unloading” on the individual involved, he recognized how easy it was to get me stirred up. I reminded him that our industry has always enjoyed special privileges—self-regulation, tax deferrals, tax deductions and tax-free benefits—specifically because of our social obligations and responsibilities. Unfortunately, the antique notions of serving policyholders, protecting widows and orphans, preserving quality of life, and guaranteeing dignity as we age seems to no longer resonate with the perception of companies as pure financial institutions.

I do not want to leave out our actuarial brothers. It’s not just about good math; it’s about reliable math that creates social well-being, safety, security, lifestyle preservation, choice and absolute control of your legacy.

While I’m at it, there are a couple more seemingly perpetual conversational aggravations which are exhausting my dwindling patience. A phantom is more substantial than a ghost because it teasingly offers the possibility of a past, present and future—suggesting the possibility of reality.

Phantom benefits are bad, period. Once and for all, selling LTC insurance without inflation protection in some form is simply wrong. It’s a phantom without a purpose. Taking premiums for younger employees who will most likely never claim benefits is blatantly without merit. Some insurance may be better than no insurance.

Enrolled benefits at the worksite without inflation protection begins as virtually no insurance and ends at the time of claim as absolutely no insurance. It’s not okay, it’s not right, it lacks a moral dimension, and it ends up bad for everyone concerned. At the very least, please sell some form of guaranteed or future purchase options or the lack of internal benefit limitations over time. I am not struggling with being kind about this conversation any more.

And my favorite source of the erosion of my vanishing patience is the whole conversation about rates. What part of accident and health insurance do you not understand? Our industry paid $4 billion in claims last year and many, many more are coming. New products are being priced with .5 percent lapse rates. It’s a sure thing—premiums will continue to rise, benefits offered will diminish and underwriting will become more restrictive. The LTC insurance industry is a permanent, unrelenting fire sale.

You cannot run, you cannot hide, and you cannot ignore your responsibility! Phantom options cannot create concrete solutions. One more time, please look around: LTC insurance sales are again on the rise, as are premiums. Benefits are on the decline, as are underwriting concessions.

What can be absolutely guaranteed is that if you do not do everything in your power to make this sale now, you will spend the balance of your career apologizing for your inaction.

Other than that, I have no opinion on the subject.

Maybe if we could find that exact moment in time and space where reason stops and reckless dismissal begins, we could repair the faulty wiring. If we could just locate the short in the normal flow of intellectual current, perhaps we could somehow prevent the squirrels from chewing on the wiring.

As certified LTC insurance professionals we understand the clear and present danger of not connecting risk to insurance.

The U.S. Department of Health and Human Services has reported that 70 percent of individuals over 65 will require at least some type of long term care services. It makes no difference that the possibility can represent one day or 15 years. The risk is real.

The recent Prudential survey, “Long Term Care Insurance: A Piece of the Retirement and Estate Planning Puzzle, 2011,” again identifies Americans’ recognition of the possibility of a shocking event causing severe damage to caregiver health, legacy meltdown and emotional fatigue. The study clearly indicates that Americans are concerned about their need for long term care services, yet aren’t confident about their ability to cover the related cost.

And we know what opens eyes, focuses attention and illuminates a rational stream of consciousness: caregiving. The Prudential survey again outlines the obvious direct wiring pattern: “The level of concern respondents have correlates directly with their caregiving experience.”

If we could just find the disconnect. Exactly where do consumers stop thinking? Where do their synapses break down?

According to the Prudential survey, 63 percent of Americans are not confident in their ability to pay for extended care. Americans understand how the wiring progresses-nearly two-thirds of Americans between the ages of 35 and 65 say they know someone who has required long term care services.

The survey also indicates that we are still unclear as to which color wire is the hot wire. Apparently one-third of Americans still believe government programs will meet their LTC needs. Americans seriously overestimate the actual cost of care, and one-third of those surveyed believed they had adequate personal assets and income to cover their own costs. The survey also suggested that waiting to buy until retirement was a better planning strategy.

Clearly, we still have an enormous educational rewiring job ahead of us. Too many Americans remain unable to make the obvious connection between the certainty of the risk and the necessity to take action to protect themselves and their families. Americans want to believe in the strength of adequate financial wiring. They do not wish for faulty wiring and unreliable planning to cause them to become a burden to their families.

According to the survey, 85 percent of married individuals bought LTC insurance so that they would not become a burden to their families, and individuals between 45 and 54 were the most likely to have purchased LTC insurance for the same reason. As consumers approach retirement and come in contact with caregiving, they do become more aware of the need.

It is always at this point where consumer surveys fail to reveal the exact location of the faulty wiring. American consumers do understand the problem and they need to resolve the problem. The survey, for example, also reported that even those who currently do not own long term care insurance recognize that it is important to retirement planning, with more than 6 in 10 rating it as “highly important” coverage to own. Consumers do understand that direct hard-wired insurance risk leveraging remains the only structurally sound alternative.

The mystery persists; the disconnect remains a mystery, resistant to repair.

We can only do what we know helps create a brighter future: educate and illuminate the reality of the risk, demonstrate our ongoing commitment to eliminate inadequate financial wiring and serve as an electronic guidance system which always finds its way to peace of mind.

Other than that I have no opinion on the subject.

Let’s return to the vision that will not leave me alone: There is an elephant in the room, and for many of us he has long ago worn out his welcome. His presence haunts our national consciousness as, perhaps, the largest unprotected, underfunded risk ever that refuses to be subdued, diminished or trained and—for far too many consumers—even acknowledged.

The time has come to find a better way. A number of possibilities for a more successful strategy are present in a report: Long Term Care Think Tank Session: From Hope to Change, March 17, 2010, sponsored by a committee—representing the Society of Actuaries and the Intercompany Long Term Care Insurance Conference Association, Inc.—which originally met in 2005 and met again last March to try to find a better approach. Participants in these meetings came from many disciplines: academic, regulatory, home office, reinsurance and marketing specialists.

The first meeting in 2005 identified five “Big Ideas”:

1. Medicaid reform to take out the “loan on home value.”

2. A short term insurance product supplemented by government catastrophic coverage.

3. Medicare and Medicaid repackaged as “Medicare Part E.”

4. Tax incentives for long term care insurance.

5. LTC finance reform/National LTC insurance incentives.

In 2010 the number of committee participants was increased and again the group worked toward a more focused action plan to recommend approaches to shrink or eradicate the problem that has defied all prior best efforts.

Two markets were identified: “middle mass,” representing 83 percent of those best suited to purchase LTC insurance ($75,000 average income, $100,000 average assets), and the “middle affluent,” representing the remaining 17 percent ($132,000 average income, $390,000 average assets).

A number of clear challenges to the committee’s success were identified with a pre-conference survey:

1. Consumer perception remains inadequate.

2. The market must be broadened to include more insurers and more product offerings.

3. Products must be simpler and more flexible, directly addressing consumer need and affordability.

4. The value proposition of LTC insurance must be made much more obvious to consumers.

5. Regulation must be more flexible to accommodate alternate product design. We will be required to find common cause with the CLASS Act.

6. Carrier participation (not retreat) must be encouraged.

Clearly one of the primary design challenges for the industry is to increase alternatives for the middle market, and the committee identified the types of products needed to best suit the middle mass as well as the middle affluent markets. Middle affluent sales are for the most part individual—both combo and stand-alone. The middle mass solution needs to be based on the concept that some insurance is better than no insurance. Medicaid supplement plans, reverse mortgages, higher elimination periods, co-insurance strategies and catastrophic coverage may better address the middle mass. It is believed that state partnership sales will help both markets.

A number of solutions were outlined as a result of the meeting:

1. Embrace technology; 30 percent of sales are already accomplished on the phone and Internet.

2. Diversify both producer and consumer bases.

3. Understand demographics such as target marketing the potential caregiver.

4. Emphasize financial planning.

5. Simplify products.

6. Mandate agent training and certifi-
cation.

Product enhancements were also identified. First and foremost, LTC insurance must become a mainstream insurance option for consumers. In order for this to happen, regulator restrictions need to be modified in order to allow greater product diversity. LTC insurance options and riders must be made available as an add-on to more existing products. Worksite underwriting concessions should be increased, based on greater participation. Non-insurance benefits such as assisted living and informal home care should be removed from LTC insurance. Last, but not least, new solutions are needed for the uninsurable.

A vision is beginning to emerge for an elephant eradication strategy. It is an approach that takes full advantage of what we have learned and is based on a cooperative approach to government programs. It builds on our strengths: product innovation, consumer education, agent training, creative sales approaches and a focused dedication that insurance is the only solution for indigent elephant inertia.

Other than that, I have no opinion on the subject.