Ronald R. Hagelman

Aradical departure from current practice in the LTC insurance market is necessary! Let’s begin with what we know and, for the most part, universally agree upon. Then we will logically proceed step-by-step to an inevitable conclusion.

The time is right for the National Asso­ciation of Insurance Commissioners to mandate LTC insurance training for all agents who sell life and health insurance. This proposed amplification of existing guidelines should become an absolute requirement to maintain a life and health license.

NAIC meets every three years to rewrite and upgrade its Long Term Care Model and Long Term Care Regulation; and the 2012 version should include this enhanced training requirement—with no exceptions, excuses, grandfathering or circumvention of state regulation.

Let’s begin by outlining those concepts with which we strongly agree. For many years the American Council of Life Insurers has made the direct connection between financial planning and the necessity of providing LTC insurance to protect the plan.

How can any financial professional have a career designed to create assets and income at retirement without recommending LTC insurance to protect his efforts? In my humble opinion we are talking about America’s largest unprotected risk. Many trillions will be required to provide care to the boomer generation.

At this point no one in their right mind would argue that the government could or should pay for this risk (the exception being for those in the greatest financial need). It must be paid by the private sector.

The remaining question is to what extent will the private sector’s exposure be leveraged with insurance. If spreading the risk is better than having the full load fall directly on those needing care, then why can’t we make LTC insurance a mainstream sale?

I am constantly asked about leads. My answer is always the same: Just make the LTC insurance risk a centerpiece of your practice. Every conversation with every client must include an inquiry about plans for LTC—their experience with an LTC event and their financial risk if they wait to solve their LTC problems. Leads are all around you—just reach out.

LTC insurance provisions in the Pension Protection Act, which began in 2010, created the beginning of the end of non-participation in the LTC insurance crusade. Far too many agents have chosen to avoid the LTC insurance risk leveraging conversation. Yet the simple and unavoidable solution to more LTC insurance sales is more LTC insurance agents!

The proliferation of LTC insurance options is contributing to the inevitable conclusion of the problem. As we predicted, LTC insurance and chronic illness accelerated death benefit riders are being glued, bolted and combined to more and more life and annuity products.

The only way to avoid the obvious is to deny the inherent truth of the proverbial Duck Theory: If it walks like a duck and talks like a duck, it is a duck, my friend.

Both LTC insurance (IRC Section 7702B) and chronic illness accelerated death benefit riders (Section 101g) provide tax-free dollars for long term care. Both are claims eligible based on HIPAA tax-qualified definitions for the two of six activities of daily living and/or cognitive impairment. Both are defined by 90-day disability. The claims are adjudicated and paid in the same manner. The only difference is where the available funds are located. Don’t even try to tell me these are not identical duck twins—chronic illness ADB riders are long term care insurance, period.

Three states have already come to this conclusion—Florida, Kentucky and Hawaii—and require LTC insurance training regardless. More states will follow, which makes the duck theory hard to ignore—it is blatantly obvious.

Yes, we have an aging field force, and new recruits are not arriving in sufficient numbers; however, that cannot be a rationalization for inadequate preparation. I cannot accept arguments based on expediency. LTC insurance training cannot be muted or divided for convenience.

This brings us back to the principal of unavoidable contact. A number of companies provide chronic illness accelerated death benefit riders with the majority of their universal life products. These riders are provided at no current cost unless they are used—costs are then deducted from the final payout. In other words, the LTC insurance/chronic illness benefit “comes with” every one of these policies. How can anyone avoid a conversation about this? Even if the intention is to make a life insurance sale with blinders on, there is still an obligation to explain that if such a rider is used, the life insurance benefit will be diminished. If you do not wish to expose the life insurance to the LTC risk, do you not have an obligation to offer alternatives?

The basic requirements are already in place in the 2009 NAIC Model Act, which states, “An individual may not sell, solicit or negotiate long term care insurance unless the individual is licensed as an insurance producer for accident and health or sickness and has completed a one-time training course. The training required is eight hours and four hours more every two years thereafter.” This very strong recommendation, which actually began in 2003, became the armature on which to build the Partnership Program training.

Basic LTC training should include LTC insurance and LTC services; state-specific Partnership information, where applicable; available LTC services and providers; changes and improvements; as well as alternatives to LTC insurance. Also, training is to include consumer suitability requirements (i.e., suitability is not just affordability; it is, more importantly, whether the sale fits the need).

The 2009 Model Regulation Section 24 spells out suitability: “The applicant’s goals or needs with respect to long term care and the advantages and disadvantages of insurance to meet the goals or needs and the values, benefits and costs of the applicant’s existing insurance, if any, when compared to the values, benefits and costs of the recommended purchase or replacement.”

What this suggests is that every agent has a fiduciary responsibility to explain all “the good and the bad” of all the choices. However, the change that will finally transform the long term care insurance industry is to remove one word from the first sentence of section 24(A): “This section shall   not   apply to life insurance policies that accelerate benefits for long term care.”

This action would be a resounding affirmation of our belief in the necessity of LTC insurance as well as the acceptance of structural benefit reality and would unleash the forces of professional obligation and moral necessity.

Remove, expunge and completely obliterate the word “no” and the phoenix will rise from the ashes!

Other than that I have no opinion on the subject!

A recent disruption in the force requires re-examination of a long-­standing debate. An ancient rivalry has just stepped back into the spotlight: true group (em-ploy­er owned) versus multi-life (list bill individual policies). Of course there are multiple structural differences; thus, conversations about who has the biggest dog in the fight are patently absurd.

Bottom line: It is never about what you sell; it is always about how you sell.

Unfortunately we are dragging a large bag of tradition, inertia and sales practice forward. Benefit specialists and wholesale brokerage have struggled for worksite hegemony for as far as I can look back.

The conflict begins with control of the decision maker: Is that privileged access the domain of the supplemental worksite benefit specialist or the broker with the “juice” to influence the outcome of the buying decision?

When you overlay the enrollment requirements of voluntary benefits, historically brokerage has had to “give ground” to worksite expertise. Yet smaller groups are an entirely different conversation. As the size of a true group diminishes, options with structured enrollments begin to lose their profitability. Strategies that include list billing individual policies to increase commissions or attempts to reduce underwriting requirements have remained a viable market for brokerage (e.g., payroll deduction life).

The wonderful world of worksite LTC insurance has shattered all of the older artificial barriers. It is different because benefits are not subject to immediate claims like health, dental, vision, disability or pet insurance.

Traditional supplemental benefits are great and, whether paid for or voluntary, the decision to offer has remained solely in the hands of business owners or human resources managers.

All standard benefits enrollments have been the same from the beginning. The need for the benefit is a given, and the decision is more financial than anything else—i.e., how much benefit for how many dollars out of my paycheck.

On the other hand, LTC insurance requires a focused mandatory educational campaign. Every employee must thoroughly understand the ramifications of not buying a policy. Long term care insurance cannot be added to a list of Section 125 benefits and offered at the same annual benefit fair. It requires a separate conversation ending in a one-on-one customization of the best benefit structure for each individual.

We are now down to a very few true group product alternatives. These choices are available to only the largest, most desirable groups, with the “desirability” based on a thorough evaluation of the potential for sales success.

A prospective client cannot just call and say he has had some sort of epiphany and wants to explore LTC insurance as a benefit option. A client must have a thorough understanding of what he needs to contribute to a marketing plan and he must be willing to allow a benefits specialist to actually help his employees.

There are a number of prerequisites to evaluate large group opportunities: sufficient discretionary income, ratio of male/female employees, access to employees, geography and Standard Industrial Codes (SIC). The bottom line is that this process is a very selective one and many will not make the cut.

When compared to the precise dissection of risk and the application of therapeutic remedies required by multi-life, true group LTC insurance could be considered surgery with a blunt instrument—only successful on a grand scale.

The most obvious scenario is the executive carve-out. This often includes multiple classes, richer benefits and individual buy-up customization. Often the most desirable groups demand the greatest benefit flexibility.

Perhaps the best method to illustrate the pricing differences between true group and multi-life is to examine the cost of buy-up benefits (which include inflation protection) and then analyze the cost difference over time. True group rates represent an aggregation of all the underwriting variables; the rates can easily be skewed to younger ages and more aggressive underwriting strategies. The classic situation would be the offer of core benefits without inflation protection.

Traditional benefit spreadsheeting involves a comparison of the employer contribution toward the benefit. This is absolutely the wrong way to make a comparison in the case of a carve-out, since there will most likely be a substantial number of buy-ups. In other words the comparison should not be about what the employer pays but, more importantly: What will the employee pay for the buy-up? What will the long term savings be to the best employees? How much long term damage would be created if “cheap” core benefits are provided?

I recently evaluated a large medical clinic carve-out where substantial benefits were being bought for all. This case clearly demonstrates the cost of buying meaningful levels of benefits regardless of who is paying. When you spreadsheet core benefit costs for the entire group, true group in this case was 8 percent cheaper than the multi-life aggregate rates. However, when richer benefits were compared (including inflation protection), the multi-life totals were 20 percent less than the true group option. This would have generated hundreds of thousands in premium cost over 25 years. What happens when the employee is paying the difference between the core benefit and the richer buy-up benefit? The employer may be paying a little more for the core benefit; however, the difference in buying up to meaningful benefit levels can make a huge difference to the employee. The question is where should you make the sale?

True group options for smaller employers are disappearing before our eyes. LTC insurance is unlike other benefits; perhaps it should never have been enrolled on an easy issue vanishing (no inflation) benefits basis. LTC insurance must be explained, and its sales applications require careful counseling and individualization. Maybe it was never meant to be just another supplemental addition to a benefit portfolio. Maybe it always needed its own separate spotlight at center stage!

Other than that I have no opinion on the subject.

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.