Ronald R. Hagelman

Speaking the words “free insurance” requires the proverbial bar of soap and a firm and energetic scrubbing of tongue and tonsils. There is always a cost: bigger, smaller, current or deferred. Our curse as insurance professionals has never been the reality of the cost of leveraging risk but the perception of cost that prevents access to sales. Although this principle may apply to all insurance sales it is particularly true of LTC insurance sales.

In a recent survey conducted by Matthew Greenwald and Associates, Inc., and John Hancock—“2009 Small Business Survey of Long Term Care”—the perception of the cost of adding LTC insurance was the “leading deterrent” for not offering coverage according to 66 percent of those surveyed. Adding LTC insurance as a company benefit always costs something regardless of the level of employer contribution. One of the primary impediments to all LTC insurance sales has been the popular myth that the price is too high and therefore a lack of understanding of the value proposition of owning a policy.

In spite of our best efforts to explain the real cost of owning a policy, it must be compared to the cost of not owning a policy.

Every decision to protect employees and their families involves some level of employer largesse—administration time, enrollment interruptions, employer-provided dollars as incentives to buy, or full benefit purchases. Decisions about LTC insurance at the worksite reside in what the french called “noblesse oblige” which Webster’s defines as “the obligation of honorable, generous and responsible behavior associated with high rank.”

The most attractive feature to employers who participated in the survey was the ability to deduct employer-paid premiums (70 percent). It was also considered important to be able to provide caregiving advice and expertise, not have to count employer contributions as employee income, and guarantee policy portability. The survey also confirmed my experience in the field which strongly suggests that worksite sales bubble up at work, meaning that two thirds of surveyed employers recognized that the demand for protection came from employees.

Now, let me ask a rhetorical question: Just how big of an opportunity is required to get your attention?

According to the Small Business Admin­istration there are 5.9 million employers in the small business market. The survey suggests that among the smallest companies almost two-thirds of employers with 10 to 19 employees had never been approached to buy! Even though the survey suggests that employers are more likely to turn to their benefit broker for LTC insurance, we know the truth—these sales are not easy and require more hands-on contact with employees than is necessary with other traditional worksite benefits.

There are tens of thousands of employers just waiting for you to ask. This is a classic opportunity to offer what you do best: individual counsel, advice and customized protection. One size does not fit all with LTC insurance.

Employers are aware and recognize the problem. Almost two-thirds of employers surveyed knew that their employees understood they may not be able to afford long term care for themselves and their family members. We know the truth about the risk—it is unavoidable.

Employers are also acknowledging the obvious with 26 percent reporting that LTC insurance issues were impacting their companies’ productivity in a negative manner. Employers are aware of the problem. However, they are not aware of the solution. Fewer than half of those surveyed were “knowledgeable about LTC insurance.” Fewer than half understood portability, carve out, and no tax to employees when benefits are provided. It is interesting that about half understood the premiums were deductible to the corporation.

I consider myself a scarred veteran of multi-life sales. The one concept I cannot subscribe to is ease of enrollment. Enrollments are often painful from an administrative standpoint. The survey clearly identified the need for “ease of implementation” as “one of the most important issues.” If there are any company folk reading this column, may I humbly suggest we all have a lot of work to do to accomplish that goal.

Employers know there is a financial problem that directly impacts them. They know that LTC insurance coverage is special and unique as an employee benefit because of the inherent tax advantages. They are aware of employee interest in LTC insurance protection. It appears that a great many of them are simply waiting on you for help.

Your mission is to help them understand that to engage in an effort to alleviate exposed need, they must lead by example! This is about caring, it is about financial self interest, it is about generosity, it’s about helping others help themselves. It mandates the necessity of largesse.

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

The inexorable march of boomer demographics exacerbated by trillions in unfunded social liabilities, rapidly expanding rolls of older family members needing care, and a known potential catastrophic risk severely underinsured keeps the LTC insurance sales conundrum on the boil.

Make no mistake: The fuel, the accelerant that burns with increasing intensity, is the growing financial implication of caregiving in a rapidly aging population. Perhaps the pressure point that may best illuminate our future is the impact of difficult financial times on caregiving practices.

According to the National Alliance of Caregiving (NAC), America’s 44 million family caregivers are the backbone of our long term care health care system, providing a current economic value of $375 billion annually. In a previous study by the NAC called “Family Caregivers. What They Spend, What They Sacrifice,” November 2007, half of caregivers spent 10 percent of their own income, $5,531 per year, to help with the expenses, and 34 percent had dipped into their own savings to help. A new survey by Evercare, a care coordination company, and the NAC explores the implications of the recession on the nation’s growing army of personal care providers. The survey was designed to measure the effect of the recession on caregivers and their recipients.

We continue to see the effects of caregiving on caregivers in terms of stress and health related issues. This equation has also had dramatic effects at work. In the Evercare/NAC survey, 50 percent of working caregivers said they were less comfortable taking time off from work to provide care, one third reported the necessity of working more hours or taking on additional jobs, and 43 percent have lost income as a result of cutbacks in working hours or layoffs.

Bottom line: Our difficult financial times have made matters even worse for America’s caregivers. Of those reporting difficulty, 60 percent reported having to spend more of their own money to help, and two thirds said they were saving less for retirement.

All the above creates an absolutely clear picture of increased stress and stress is directly responsible for jeopardizing the health of the caregiver. They are also concerned about their ability to continue to provide care for their loved ones with 50 percent reporting that the economic downturn has increased their worries.

The burden of caregiving can be relentless both economically and emotionally. Recent economic realities have certainly not helped. The good news is that in spite of the additional adversity, 66 percent reported that the quality of care provided has not been diminished, even though 21 percent of those caregivers surveyed reported that they had to move in with their care recipients. The obvious begs the question, policies in place would have helped.

Here is the last statistic from this survey which demands our attention: 64 percent were employed. This leads us directly to another annually updated survey on worksite benefits from MetLife. The “Eighth Annual Study of Employee Benefit Trends: 2010.”

Employee benefits have remained “resilient” even in the face of an ongoing recession. Employee productivity seems to be a primary focus of benefit selection strategy. Programs which foster health and wellness as well as financial security support productivity goals. Surprisingly, employees feel optimistic about the future and are making an effort to improve their financial deficiencies and reduce personal debt. For instance, it is no secret that more people than ever before have been seeking out assistance from National Debt Relief and other debt consolidation companies looking for ways to improve their finances.

Employers’ number one concern is to control benefit costs, followed by the traditional desire to attract and retain the best employees, with employee productivity coming in a strong third.

When taken in combination, the concerns of the employers and employees polled in the survey would suggest that voluntary benefit programs contribute greatly to accomplishing all three goals. Employees do value their benefits and recognize their value as a financial safety net. It was also pointed out that there is a price to pay when employers reduce benefits. This consistently creates an immediate decline in employee job satisfaction.

Benefit satisfaction is actually at an all-time high. More importantly there is a very strong relationship between benefit satisfaction and job satisfaction. In addition, financial security was directly related to loyalty, which is obviously good for employee retention. The bottom line is that difficult economic times have spotlighted the vulnerability of retirement plans. It seems logical to suggest that strategic planning to create as well as maintain assets and income at retirement requires the necessity of LTC insurance protection to guarantee those objectives.

What jumps off the survey is the optimism and confidence in future success both for employees and employers. I am just one of many eternal optimists, even when faced with the most trying economic times since the Great Depression. I am just another soldier in an army of happy campers.

Maybe Americans are the world’s original happy campers. Maybe our only real job is to shield and insulate those happy campers from a known unavoidable adversity. I am again on the road in my RV this summer speaking to agents across this beautiful land, and I see many happy campers smiling and waving as I pass. But, more importantly, I see hope and determination!

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

What’s old is new again. In the mid-1980s when you were taking an individual health application, if a client would say—”Just a minute, I need to check my blood sugar”—you knew automatically that your next question would be, “Where do you work?” At that time it was possible to acquire small group comprehensive health insurance with only three lives, either guaranteed issue or modified guaranteed issue.

In April 2004—when I began writing for BROKER WORLD—one of my early columns, “The Visit,” proposed more aggressive small group marketing. In that same year I created the first packaged multi-life product with Loyal American Life. Multi-life is a list bill of individual LTC insurance products; it looks like small group insurance and it is marketed and sold accordingly. To reiterate what has been mentioned in my columns on numerous occasions: This is a massive sales opportunity.

There are several million American businesses with fewer than 500 lives. After all these years, something less than 20,000 business owners both own or offer LTC insurance. Even Washington can understand that math.

LIMRA surveys have identified LTC insurance as the most popular worksite benefit. I can also confirm that the majority of small group sales bubbled up at the worksite. Although the sales are improving, most did not originate with the agent asking the right questions. Instead, workers or owners recognized financial self-interest or experienced caregiving realities for family members, which created the momentum for sales. Pricing for individual LTC insurance is built on an expectation that known potential claims will be turned at the door. Depending on age, one out of every three or four applications is declined at the home office. This number does not reflect those turned down by good field underwriting practices.

Multi-life is different. By definition we are spreading the risk. There is still a full battery of gatekeeper exclusions. We are substantially protected by an actively at work status and, therefore, can afford some blended morbidity assumptions. Reduced underwriting also means reduced administrative expense.

Benefits are available on a reduced basis and, for the most part, standard not preferred ratings are utilized providing additional risk mitigation. You can currently count on two hands the companies providing reduced underwriting concessions for small groups. Many of these new opportunities have only recently joined the market.

Frankly the multi-life, true group and association business has been keeping LTC insurance alive. According to Jennifer Douglas, associate research director, LIMRA, “In 2009, nearly half of all new buyers (48 percent) purchased LTC insurance through or at work (whether true group or individual worksite), accounting for 27 percent of all new premium. Those percentages are 54 and 35 if you include association business (the majority of that was individual multi-life).” In other words, affinity-based sales represents the great and vast majority of new sales.

These small group products are built in a similar manner. There are usually two thresholds for underwriting concessions. One threshold is based on an employer contribution and one on a purely voluntary basis.

There is a lot of confusion about how companies refer to their modified guarantee issue option. In my opinion there are only three categories of LTC insurance group underwriting.

Guarantee issue is guarantee issue. Although over the years I remember vividly asking underwriters, “What part of guarantee issue did you not understand?”

Modified guarantee issue means that the underwriting will take place exclusively off the short form application. If you answer the questions correctly, you will get a policy. This means absolute predictability of the underwriting outcome.

Simplified issue, on the other hand, means that although the process and application may be abbreviated, the company reserves the right to perform additional underwriting, including: prescription drug screens, APSs and phone interviews.

Regardless of what a company names an underwriting option, I just want to know how it actually works. I am often working with clients who have already experienced rejection or disappointment with LTC insurance underwriting and I do not want to be responsible for revisiting that experience.

Multi-life operates successfully in a classic wholesale brokerage environment. No one company has a monopoly on the truth. There are substantial differences in affinity discounts, marital discounts, specific underwriting questions, employer contribution requirements, benefit availability, commission haircuts, policy form availability, technology (online applications) and premium.

My own placement ratio has improved substantially over the last six years. Currently the majority of cases we initiate conclude in placing some level of protection.

Here is what I have learned:
1. Take your time and identify the buying motivation before you begin to sell. What brought your client to the party?
2. Each sale is about explaining and illuminating a known risk and then looking for the commitment to solve the problem. You are always drawing a line in the census.
3. LTC insurance buyers are only those who plan ahead or care ahead. The sale is always about protecting money or preventing caregiving burdens.
4. Educate your prospect first and show premium last.
5. Each sale is a normal progression from executive carve-out to core buy up to voluntary. Employer commitment and participation in the solution is pivotal.
6. Step back from your ego. If you must do voluntary, ask for professional help to provide an aggressive educational campaign and professional enrollment assistance. Successful voluntary sales can be brutal and elusive.
7. Understand the important pressure points in the sales process and seek assistance from a knowledgeable LTC insurance brokerage operation that will provide sales support and not just proposals.
8. A Section 105 medical reimbursement plan allows you to create classes of benefit availability based on length of service, occupation and income. Any employee census can be “sliced and diced” to meet your needs.
9. Never forget your basic mantra: deductible premiums (all or part), tax-free benefits, no FICA, no FUTA and no W-2s.
10. LTC insurance is the best bang for the buck in the benefit market. It can be very inexpensive and usually represents less than 1 percent of payroll and is a fixed budget item which diminishes over time.

Modified guarantee issue is available at three lives. Participants are not required to have homogenous benefits. Almost everyone actively at work may be able to get coverage even if previously declined.

Get a census on Excel (not on a napkin), with date of birth, marital status and job description with income. Contact an LTC insurance BGA with multi-life expertise and help many more protect themselves and their families.

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

This column has remained consistent in its optimism. Even when faced with the reality of declining sales since 2002, my faith in the necessity of this protection remains solidly intact. What I want to report is my belief that the stars increasingly compliment our commitment and that cosmic forces seem to be finally gathering to mandate an industry focus on the success of LTC insurance risk leveraging.

First we obviously have nowhere to go but up! Demographics is destiny. The boomer age wave hit the beaches in 2005 and peaks in the year 2015. The fate of our financial planning careers is all about the boomers and their “Benjamins.”

Why would anyone knowingly and intentionally leave his retirement security at risk?

An illuminated question for our industry is: What are the long range implications of an aging population with unprotected assets and retirement income? Quite frankly, insureds are not who I’m concerned about—it’s their children asking fundamental questions about fiduciary responsibilities.

How do we maintain our professionalism and continue to ignore the potential financial devastation of an extended LTC event?

Is there anyone out there who believes that our government does not clearly understand that it cannot pay this bill when it comes due? Every national insurance legislation since HIPAA has been a government-sponsored incentive to buy. It is known and understood that these risk dollars must come from private sources.

HIPAA began the birth of the tax-qualified universe, creating tax-free benefits and corporate premium deductibility spontaneously from the vacuum of space.

The Deficit Reduction Act of 2005 nationalized state partnership plans, driving more sales to the middle class, as well as vaporizing most Medicaid planning strategies.

The Pension Protection Act of 2006 created a brand new star in the heavens—tax neutral LTCI rider risk charges—and began the growing vibration of 1035 antimatter implosions.

And now we have the background space noise of the CLASS Act that will, at best, increase radioactive risk exposure at the worksite.

All of these events, when taken in sequence, represent a galactic conspiracy to encourage consumers to take action.
 • Multi-life and group LTCI has expanded as predicted. Beginning in 2008 the majority of LTCI premium now takes place in the new and rapidly expanding universe of affinity-based premium with reduced premium and underwriting. We are seeing a massive concentration of a previously unknown element in the cosmos which dramatically grows sales: modified guarantee issue underwriting concessions. Our new first line of defense when we encounter underwriting dissonance is to ask: “Where do you work?” Abbreviated underwriting concessions light up the night sky.
 • Agent training requirements are bringing order out of chaos. In my opinion the NAIC Model Act and Model Regulation requires LTCI training of all life and health agents. This includes a substantial injection of suitability and ethical conduct requirements, including the necessity of explaining all the good and all the bad for all the choices. Light from these new stars cannot be avoided, ignored or explained away.
 • The advent of new combo products restores choices and alternative energy sources to our exploration of the known financial universe. Travel from one sale to the next is also accelerated by adverse economic times. There is a buzz in the space-time continuum concerning the necessity of policy review. Combo products and new 1035 guidelines can mean many more sales, yet a receding need for new premium. Combo product development and 1035 activity will provide fireworks in the heavens for some time to come.

There is ultimately no other answer; Medicare and Medicaid are collapsing into their own black hole of unfunded liabilities. The cosmic truth becomes unavoidable: “If you can afford to pay you must pay!” As boomers age, soft issues also grow in resonance and gravity, providing increased luminescence to the core concerns of money and caregiving such as: freedom of choice, dignity, control of financial destiny, avoiding dependence and leaving a legacy.

Evidence of transcendence is all around us. The planets are in alignment and our future is clearly revealed by the brightest stars in the heavens.

Other than that, I have no opinion!

All any good salesperson needs is a lead-in conversation—one that is bright, perceptive, insightful, thought-provoking and basically nonthreatening. There is a legend in our business of the agent who made MDRT just riding an elevator in a large office building. He had only a few minutes to make his points and then asked for an opportunity to elaborate.

Optimism remains our life blood. In LIMRA’s “LTCI: An Industry Reflects 2009,”¹ the top three reasons for optimism were (1) demographics, (2) increasing consumer awareness, and (3) opportunities at the worksite. The boomer age wave is upon us. Consumer awareness—formed from financial uncertainty and caregiving distress—is eating away at denial. Worksite sales—fueled by the need for alternative cost-effective benefits and liberalized underwriting concessions—continues to outpace the relative growth of individual sales.

Now, what should you say to connect to these growing sales? First, you must ask (if necessary ask over and over again):

Do you have your LTC insurance protection yet?

Every planning conversation must include the identification of retirement dollars. You must end the misperception that somehow LTC insurance is an optional expense. There is no choice. Your client must either take action to protect himself and his family or accept the responsibility if he does not.

You must speak firmly of the inevitable nature of the risk: You will get older, your health will change, and you will need care. Care is very expensive and it will be even more expensive when you need it.

I begin every employee enrollment meeting by telling the audience that my daughter’s favorite movie was The Lion King. At the core of this presentation is the circle of life concept. We enter this world dependent on others and the great and vast majority of us will leave it exactly the same way.

For potential clients who are by nature more analytical, operating on the assumption that you would not even presume to sell LTC insurance to others if you did not already own your own policy, tell them: You know, I had a $1 million problem. Do you? Now stop and do some fast math explaining current annual cost, current typical claim durations and what inflation does to that cost in 30 years.

Next, ask the obvious: Where will the money come from? Someone must pay! You, the government (with you as a welfare recipient), or insurance.

The all-time favorite is of course to go fishing for the caregiver connection. Ask these probing outcome questions:
 • Who will care for you?
 • Whose life have you chosen to disrupt?
 • Which family member will lift you, dress you, bathe you and change you?

A conversation about the changes in the law is always a good place to start. Begin this conversation with a neutral informational question: Did you know that the law has changed and your assets are now at risk? Next, discuss the Deficit Reduction Act of 2005 in a dispassionate academic manner, explaining the change in the transfer of assets regulations. This conversation may also then lead logically to an explanation of state partnership plans. Most are still not aware of the benefits of partnership plan ownership. This is also an excellent time to tap into resentment of government sponsored asset recovery. (I’m sure you don’t want the state to sell your home to pay your Medicaid bill.) The partnership sale is very straightforward:
 •  What is it in your life that you care enough about to protect from the state?
 • Is there any part of your legacy that you wish to leave to your children and grandchildren?

I have some new favorites as well. The Pension Protection Act and the availability of favorably priced and underwritten combo life and annuity products leads directly to these questions:
 • Does your life or annuity policy pay for long term care if needed?
 • If I could show you how to protect your assets and triple your benefit values—if needed for long term care—without having to ask for new premium, could we at least visit?

And the new question that I now work with every day is based on modified guarantee issue thresholds as low as three lives: Where do you work?

With a sufficient number of lives, almost everyone actively at work, regardless of underwriting status, is eligible for LTC insurance coverage!

To all those veterans still actively involved in the struggle, as well as all those recently re-enlisted or newly recruited, please help yourself to this verbal arsenal. My hope is that it will immediately grab your client’s attention and begin the journey that we know will alleviate an enormous burden for them and all their loved ones.

Sources
 1. “LTCI: An Industry Reflects,” Jennifer L. Douglas, 2009. Over 80 executives representing insurers, reinsurers, producers and consultants provided LIMRA with their thoughts, insights and opinions as to the state of the long term care insurance industry, as well as with their predictions for where they see the market heading.

Over the years, I have approached the long term care insurance sale from more directions than most. These columns have continued to chronicle the historical evolution of our crusade to protect more Americans from the looming eventuality of an asset-sucking black hole. I have appealed to conscience, intellect, responsibility and reason.

Maybe I missed the barn! The often unspoken truth is that the great and vast majority of agents and general agents have simply chosen not to help. I don’t care how you measure the results, less than 10 percent of consumers have bought; but much more significantly, less than 10 percent of agents have made any real attempt to make the sale.

Let’s look at the numbers. There was approximately $500 million of new premium last year. Let’s optimistically estimate three applications per agent at the current average of $2,000 premium each. Even if you were to factor in group sales, we are still looking at no more than approximately 80,000 to 100,000 agents involved in trying to write an application. Recently I purchased a list of all the licensed agents in America, and it was more than one million names. Granted the list contains property and casualty agents as well as restricted captives, but what is clear is that only about 10 percent of the available agent pool is involved in upholding their end of their professional pact—to protect their customers.

My own rough estimates also suggest that fewer than 50,000 agents have had any kind of professional designation training and fewer than 10,000 belong to a professional LTC insurance organization. I doubt if there has ever been an LTC insurance conference that drew more than 1,000 producing agents, and I am afraid to even speculate on how many may have recently completed the 8 hours of NAIC/Partnership training that is required.

We continue to lament the excuses, rationalizations and denials utilized by procrastinating consumers. We continue to puzzle over the lack of clear thinking, acceptance of certain risk, and necessary forethought to do the right thing. Yet, if I’ve done my math right, 90 percent of the insurance professionals in America need to stand in front of a full-length mirror and ask themselves the same questions.

Now let’s see if I can paint a giant bull’s-eye on the side of the barn. There has never been a greater opportunity to help American consumers and earn a living in the process.

Begin with the obvious: There is no health product with greater persistency. There are no renewals more reliable. Read my lips: You can and will make more money selling LTC insurance.

Now let’s compound the obvious. Multi-life and group sales have risen steadily as a percentage of the business over the last five years. My own experience suggests that average premiums are in the $20,000 to $30,000 range, which also include exceptional renewals and growing re-enrollments from sales already in place. While I believe that to succeed in the multi-life market requires assistance from an LTC insurance brokerage specialist, the product is in demand at the worksite and provides a fantastic method to solve underwriting obstacles. The bottom line is that multi-life sales generate very significant and ongoing sources of commission income.

In my humble opinion, the Pension Protection Act will generate the largest commission bonanza in brokerage history. The new combo products arriving in the marketplace are, for the most part, asset-based, meaning on average six figures of initial deposit with substantial first year relocation compensation four to five times greater than an individual LTC insurance standalone sale. My suspicions are that most of this premium will be relocated from existing sales with a 1035 exchange. So let’s summarize: It looks like big new commissions will come, for the most part, from existing sales with no new premium commitments necessary.

Agents avoiding the long term care risk conversation do so at their own peril, both professionally and financially. In my own mind, suitability provisions in the NAIC Model Regulation guidelines clearly describe the necessity of explaining all LTC insurance risk leveraging options. In addition, the Pension Protection Act opens a new and expansive universe of sales opportunities.

All the excuses for not helping are going to evaporate. Enormous LTCI commissions will finally put fuel in the tanks so that we can move forward. The first time an agent sits out of the struggle and loses an enormous commission, or learns how to make an enormous commission, the LTC insurance sales conundrum will finally come to an end!

In a recent debriefing of a voluntary enrollment I was reminded of what may be the absolute best tipping point in the long term care insurance sales conversation. You must be patient, you must continue to ask probing questions, and then you must wait for it. It will come, someone will raise their hand and tell the infamous mother-in-law story.

There are always two pending firestorms in the event of a need for custodial intervention: one is financial and the other is emotional—both are potentially overwhelming. However, discussing the possibility (or reality) of having to deal one-on-one with a mother-in-law in need of assistance will absolutely galvanize the intentions of all in the room. In truth there may be no more powerful force in the known universe of family dynamics than the sheer force of the mother-in-law hegemony.

With the mere mention of a “mother-in-law in distress” concept, a hush falls upon all assembled. Grown men weep. Women avert eye contact so as not to confirm the presence of the elephant that has just entered the room. It is at this point that you must press for the sale. There is no better opportunity!

The mother-in-law caregiving dynamic may be the one family concept that transcends all barriers of denial, procrastination and feeble non-buying rationalizations. As we all know, you must first establish risk and then proceed immediately to call for action.

All consumer surveys have illustrated that the most direct path to the sale is finding a caregiving connection. Emotional stress compounded by financial entanglements seems to be the cultural definition of troubling in-law interpersonal relationships.

A couple of statistics illustrate why this is fertile ground for making long term care insurance sales.
 • Seventy three percent of today’s long term care is provided at home, mostly by family members (About Long Term Care at Home, Thomas Day, www.longtermcarelink.com).
 • Thirty four million Americans care for a loved one age 50 years or older, and half spend more than 10 percent of their own income, averaging up to $12,348 annually (Study of Caregivers, Evercare in collaboration with the National Alliance for Caregiving, November 2007, www.evercarehealthplans.com).

Further Findings from the Study of Caregivers

The direct financial impact of caregiving was examined and the study found that even though the commitment to family was made willingly, the cost was staggering.
 • Thirty seven percent of respondents had to quit their jobs or cut back on hours.
 • Caregivers saved less for their own children’s future; used their own savings; cut back on basics—clothing, utilities, transportation and groceries; and/or cut back on personal medical and dental expenses.

Even if it is only the stuff of social and cultural legend, most of us would probably view these issues differently based on family relationships with a genetic foundation versus those through marriage. This is not a mother-in-law joke. In truth, by focusing attention on the nature of the problem, our beloved mother-in-laws may do more to help protect American families from the devastation caused by a long term care event than any other factor in the risk equation. Find a mother-in-law story and you will find the sale.

The Community Living Assistance Services and Supports (CLASS) Act, floating around Washington since 2005, has been cut and pasted into both the House and Senate versions of pending health care reform legislation. Although it is still unknown what, if anything, will be forced upon us, it is safe to suggest something will change.

A generation of legislation has attempted to provide incentives to American consumers to buy (HIPAA, DRA 2005 and the PPA); however, ownership of long term care insurance remains somewhere south of 10 percent. The incentives have not succeeded, and it appears that impatience, partisan politics and bad math are conspiring to create yet another social entitlement program to overburden future generations.

Why is this happening? There is a long list of false assumptions. It begins with a belief that the insurance option has not worked. Even if true, the critical concern must be to ascertain the cause. Begin with the notion that an insufficient number of agents sell or have sold the product. Those who do sell it recognize that it remains a difficult sale, and they understand that LTC insurance must be sold each and every time. In addition, a philosophical prejudice is embedded in the legislation that paying claims at home is inherently cheaper than in an institutional setting. With current home care costs running as high as $25 per hour, I am at a loss to understand this line of reasoning.

Yes, something must be done. However, this new entitlement monstrosity is not the answer. There are affiliated health care industries that are probably almost giddy at the prospect of open, easy cash flow such as home care or assisted living corporations. There are also voices within our own ranks that suggest that increased awareness of long term care needs caused by this bill is a good thing. This is not about good or bad anything. This is wrong. Wrong will always be wrong until it becomes law, then we will adapt and continue to do everything possible to protect our clients.

There are several structural issues and concerns that require careful consideration. The new trust fund created will book premiums for years before substantial benefits are paid. This creates an artificial credit against the cost of the health reform legislation and reduces the perceived cost of the legislation, creating a direct catalyst for its inclusion. The Society of Actuaries has concluded that the programs would be insolvent in 11 years. In addition, a nonbinding Senate vote mandates that the new trust funds can be used for this program only. No matter how you look at what some have called a “Ponzi scheme,” we are all being asked to simply have faith in yet another social welfare program.

The voluntary “opt out” enrollment provisions, making this a guarantee issue opportunity with a liberal definition of actively at work, will contaminate rather than encourage sales at the worksite. If you completely ignore adverse selection, you are no longer marketing insurance—you are simply prefunding a known risk. More confusion will be brought to the worksite in terms of what is being accomplished, what is actually covered and how much is enough. There is virtually no commission available from this program, which dooms any real enrollment success. Premium for long term care insurance will not sell itself. The size of the benefit of $50-$75 per day is insufficient on any level, unless perhaps it is being added to a Social Security check, to provide universal assisted-living admissions.

The proposed cash advance will coordinate with all reimbursement policies creating more confusion. Do you keep current coverage? Do you reduce coverage or only buy alternative supplemental insurance? The answer is leave realistically priced benefits in place and frankly, don’t change anything. We have always sold “supplemental” coverage. The numbers and thresholds may move, but the nature of the sale itself will not change.

The CLASS Act panders to the lies that have plagued us for too long: Insurance underwriting practices based on avoiding adverse selection are somehow undemocratic. Conversely, egalitarian offerings of universal coverage must therefore be inherently good. Besides, everyone knows Americans will always eagerly line up to protect themselves and their families.

The CLASS Act has no class. It is built from a solid foundation of hollow misrepresentations. It represents a wind tunnel of philosophical fantasies, false assumptions, monumental adverse selection, faulty pricing assumptions and a complete disregard for human nature. Other than that I have no opinion on the subject.

Perhaps the most rewarding activity for insurance professionals is that we are able to spend an inordinate amount of time as students of human behavior. You might say we are witnesses and casual observers of the American consumer’s strengths and weaknesses.

The ongoing challenge of making more sales and the mystery of what motivates a buying decision is what keeps my engines running. Frankly, the challenge of the LTCI conundrum is what wakes me almost every morning. I really have only one line of business; thus, in order to maintain my sanity, I must also strive to maintain my sense of humor and enjoy my entertainment where I find it.

Recently during a large voluntary enrollment I decided to push the envelope a little at the employee group meeting. Traditionally we explain what we mean by long term care and how LTC insurance provides a reliable solution to a real and potentially devastating problem. We have learned it is best to approach voluntary enrollments with a classic assumed close. We have even gone so far as to fill in the names on the application and simply check off those who refuse to participate in this discounted employer-sponsored program.

My insurance career actually began in worksite marketing—I was a payroll enroller for permanent life insurance. Nothing has changed from when I walked to the front of the room almost 30 years ago and ended my presentation with a very strong admonition that if the attendees had not filled out the application to please turn it over and sign the declination of coverage. My next suggestion was—and still is—for those signing the decline to drive safely on the way home.

At one recent meeting we gave each employee a one-page form, an application for a personal interview with a declination of participation at the bottom, and sample rates for three options on the back. This very official looking declination read: “Decline Coverage—OPT OUT: I understand I have the ability to apply with reduced underwriting during open enrollment at my employer and I decline to apply for coverage. Please print name, sign and date.”

Several times during the 20-minute presentation I held up the form asking everyone to schedule an appointment during the enrollment period or to please sign that they chose not to participate. I emphasized that my enrollment partner would be at the door checking paperwork when they left. Before I disclose the results of my somewhat aggressive performance, I want you to know that the next morning the human resources staff who were present suggested that perhaps I had been a little “pushy.” Of course, I very kindly and sincerely explained that I only wanted everyone to have the opportunity to make an informed decision and choose to do what is right.

Now here are the very interesting results: Half of those in attendance signed up for an interview (not bad). The other half turned in the forms with their names at the top, but no one signed a declination. I had a two-hour drive home that evening and I laughed to myself most of the way. Those who did not sign knew it was wrong—they knew they were choosing to leave themselves and their families at risk.

Based on the questions I received at the end of the meeting some even had parents who had experienced the cost of long term care, and still they would not buy or admit publicly that they were making a bad decision. Most importantly, it was not a matter of cost—these were solid payrolls and very affordable benefit options.

One final note, I have been repeatedly asked to comment on the LTC insurance provisions present in both the House and Senate versions of pending health reform legislation. For the very same reason no one would sign the declination, the voluntary employer enrollment option outlined in the bill will not work! These provisions would, however, complicate our sales and confuse our course of action installing yet another educational obstacle to helping our customers protect themselves and their families. They will not improve anything meaningful and, to be completely honest, I’m not laughing right now.