Ronald R. Hagelman

We just keep poking at the mystery. Logic continues to demand of our experientially wired brains that we could and should be able to connect the most clearly perceived dots. Therefore it is impossible to not speculate that the current most visible features of this miserable pandemic should, at the least, help us better focus on our sacred mission. Unfair and premature mortality should ride like the Four Horsemen of the Apocalypse through all our dreams. In tandem with that nightmare hovering at the edges of our consciousness is the potential personal intensive care and iron clad isolation currently being required of far too many. I can only hope and pray that this sure and certain knowledge may finally contribute to more American consumers taking action.

There is current survey evidence that consumer awareness is on the rise. Genworth recently released the COVID 19 Consumer Sentiment Survey. Approximately one-third of those surveyed said they had already begun to take action to be better prepared. Two-thirds recognized the vulnerability of their loved ones. America and the world have all become daily caregivers of themselves and those requiring assistance. The survey confirmed this overwhelming shift in focus with one in three having become “overnight” caregivers of all those dependent on the help and support of others. We know that the cost of caregiving is a double edged sword. The problem has become all too real with one in four concerned about their financial future and half of those surveyed experiencing emotional distress.

Now, forgive me, but all the still functioning synapses of my brain would suggest that this painfully obvious revelation should certainly lead to definitive buying behaviors. Aren’t we, after all, an industry that prides itself on helping others visualize the problem, then helping determine its magnitude, leading to taking preventative measures in a timely manner to blunt the risk? This has always been our shining truth, the mantra of our mission, and it has held true—right up until we dared to challenge what in my mind represents America’s largest unprotected risk: Long term care. Long term care risk is just different.

Our industry has a couple of very illuminating longitudinal studies: The
LIMRA /Life Plans Buyer Non-Buyer Survey and LIMRA Insurance Barometer Study. The most recent 2020 evidence from the latter again illuminates our persistent conundrum: American adults understand mortality, with 54 percent owning some form of life insurance; and, Americans understand morbidity, with 85 percent owning health insurance. It is the kissing cousin risks (disability and long term care) that remain unable to connect the dots between understanding the need and taking action to deal with it.

At 61 percent perceived need vs. 18 percent ownership, long term care represents the greatest disparity between perception and reality. The acceptance and acquisition of combo policies continues to strengthen. There is an interesting subset of perceived consumer purchase reasons for the growing popularity of combo sales. There is a perception that these products allow them to make economic decisions about the protection of their resources. It alleviates a general anxiety over future expenses and specifically it prevents having to buy two policies for the same purpose.

These are certainly insightful findings. However, please again bear in mind the effect of cognitive dissonance. As we continue to try to understand perhaps the greatest mystery of our times, we must remember that there are three parts to understanding what happened during the buying process. First, what are the buying predispositions? In other words, what do consumers “say” their preferences are in order to be willing to buy? Existing surveys do help identify a perceived wish list. Second, we do have good data telling us what consumers “say” were their rationalizations for buying. But, ultimately, the critical missing piece of the puzzle is what actually happened between these two perceptions. We need to determine what actually happened to convince them to buy.

This answer must come from those successful advisors in the trenches on the front lines making it happen. We need precise laser analysis to understand the motivational forces that are actually moving us forward. It is the only way we can hope to change the persistent intransigence of The Great Disconnect.

Other than that I have no opinion on the subject.

This is a time for clarity. If ever there was an opportunity to reflect on the obvious it is now. Critical baseline values, intrinsic social obligations and the meaning of cultural responsibilities to each other, in my humble opinion, have never been more important. The cry for common cause and common purpose currently haunts every American psyche. In these troubled times the disparity of understanding of what should unite our thinking and consolidate common ground is truly alarming.

Clearly identifying those common denominators of collective knowledge that bind us together is the only way we can ever move forward. It struck me that this is particularly true in our own little back eddy of long term care risk mitigation. Therefore, in no particular order of importance, I would like to try to establish a baseline of what we should all know to be Common Knowledge:

• Nobody wants to suffer the ill effects of ending life’s journey in an institutional setting. (Nursing home or prison.) No one can escape the current implications of overcrowded, underfunded, locked down institutionalized and intentionally discounted care.
• Again, the readers of this column are the original founding members of the “International Stay at Home Fraternal Order of the Sainted Caregivers of the World.”
• No one really wants to talk about the problem, but virtually everyone is aware that it exists.
• Limited market penetration has been a mirror image of limited acceptance of the insurance selling fraternity both affiliated and non-affiliated.
• “Planners” are of course the most likely to respond, but even this primary cohort of all insurance sales have to be cajoled and frankly marginally coerced to take action.
• At the heart of virtually every sale is a personal or tangential experience with the emotional and financial consequences of being unprepared. The cost of caregiving binds us all together.
• Everyone would prefer quality private care yet consumers consistently underestimate the actual cost of care and remain perpetually confused about who will pay. We all of course suspect this is simply intentional blind ignorance.
• No one disputes our known history. This is certainly not the first or probably the last time we underpriced health insurance. The burning frustration is that the largest pricing concern was how much consumers who did buy loved what they bought. The negative feelings caused by onerous rate increases has done more damage than we choose to admit.
• We have slowly but surely priced ourselves out of our market. Twenty five years ago the average assets of LTCI buyers was $40,000…it is now approaching $100,000. As average cost rose underwriting constricted and sales fell causing producers and consumers to abandon ship.
• It was always about cost to benefit. We continue to find ourselves just out of reach of the very market we need to insure, those whose fragile assets and marginal retirement strategies are most vulnerable. Individual traditional LTCI premiums are teetering on the edge of $3,000 and multi-pay combo premiums are rapidly approaching $5,000—tantalizingly just out of reach of what every consumer survey suggests is successful marketing territory.
• We know that the best way to achieve successful market penetration is to offer protection at the worksite, a market that has unfortunately and embarrassingly now dried up and blown away.
• The gravitational pull of double-dipped benefits with state supported Partnership plans might be kindly compared to a not overly embarrassing belly flop.
• Why are we surprised at growing claims? Those who do buy know there is a problem. Why can’t we accept this as adverse selection at the get go and face up to the consequences?
• We know that corporate premium deductibility will drive sales, yet currently the argument finds itself in the fine print at the back of new and improved marketing materials.
• It was always supposed to be our intention to leverage the risk of those at greatest risk, yet we find ourselves quietly justifying the importance of leveraging dollars for the wealthy.
• I’m very sorry but there is only anecdotal evidence from consumer wish lists that additional tax incentives which might allow access to tax deferred accounts will change the dynamics of the sale. We all know that there will have to be a balance of commitment to the risk from public and private sources. Eventually, one will have to lay claim to the front end of the risk and the other the surplus and excess. Frankly, whichever one prices out better politically will get to choose heads or tails.
• There is massive confusion in the combo market. Beginning with the definition of what constitutes a Hybrid product (which is currently all over the spread sheets). And…anyone who does not read carefully the specimen language of the riders at play better have a low deductible E&O policy.
• Two thirds of the affluent do not have a financial plan. How can long term care protection be a firewall around a non-existent structure?
• If you study current LIMRA combo production there are really only two visible signs of sales growth: Variable UL and SPUL. In other words, the only way to hang on a long term care/chronic illness ADBR is to dangle it as a bonus feature of a very aggressive account value projection.
• And before we all become too proud of the fact that 90-plus percent of the long term care market is combo, please note that 85 percent of those sales did not charge for the rider! So, apparently, if our mission was to reduce the net cost of the risk, the only way we can sell it is to give it away!
• Furthermore, those predominant discount or loan method riders are in truth nothing more than a convoluted life settlement—which might be the shortest distance to a fair present value anyway.
• Insurtech holds great promise of enhanced private care at home and major reductions in personal cost. Unfortunately this growing group of innovators suffer from the same shortage of funding that has plagued our cause from the beginning.

Dear friends, until we stop and take inventory of the absolute truths we have learned the hard way over the last 25-plus years, we cannot hope to build any kind of new future. We already share a common cause. If we could just convert our common knowledge into common purpose we may finally get this done!

Other than that I have no opinion on the subject.

Hard to know where to start. What has been painfully obvious to us for too many years is our deep seated understanding of the meaning of “staying at home.” We have been the hard-headed advocates of the safety, security, comfort and importance to our overall well being guaranteed by the intrinsic desire to age in place. Over 80 percent of all care takes place at home. There has never been a buyer of long term care protection sold that began with a primary desire to languish in an institutional setting. This was of course most clear to those who had witnessed that possible eventuality within their own inventory of family and friends. Our problem, of course, is that consumers understand exactly what they do not want but, as we know all too well, have serious difficulty coming to grips with what they should want.

For 30 years I have had the privilege of standing with a fanatic cohort of dedicated professionals who rose each morning to help as many as possible Stay at Home. Listening to the endless monologues of talking heads evaluating the pandemic, it’s almost as if they have uncovered an underground religious cult. It is certainly safe to say that a new culturally permanent personal understanding of the good and bad of staying at home will become a measure of historical progression on a global scale.

What matters is that all our lives will be changed forever. When we again feel truly safe, the last “phase” will be a time of reflection. What did we learn? Which past expediencies are now permanent? How can we be better prepared if and when there may be a next time?

May I humbly shout from my front porch: “Lord please help us never forget who suffered the most during this crisis and still remains the most exposed to real mortal risk! We are all overburdened and spiritually anesthetized by the relentless progression of negative statistics. May we forever remember that the overwhelming majority of this mountain of death took place in institutional settings! Those most vulnerable, those already at the mercy of their often underpaid and inadequately regulated care givers have been hit the hardest. Those already, in many cases, afraid and alone have paid the highest price.

Two specific events have lodged themselves in my daily thought: 1) The Governor of New Jersey today sent in National Guard troops to shore up the spiraling conflagration taking place at nursing homes and those huddled together for the need of long term care: 2) Yesterday a panel of virus experts declared that we of course knew exactly where the greatest concentration of vulnerable populations was located and still we waited too late to focus our attention where it was needed the most. In other words, we knew exactly where we needed to be to defend those who could not defend themselves and, as these experts then brazenly admitted, we should have begun our defensive moves there. Frankly folks, after this media event I had to take a long walk in my garden. It remains my refuge when our collective failures require emergency reflection.

My ask, reflected perpetually in this column and confirmed by the continuing faith of those who read this column, is that private at-home care remains the answer. How can we not have acquired a new collective memory institutionalizing a now unforgettable and universally recognized truth? Quality private care at home must never again escape our shared cultural consciousness. That avoiding the possible horrors of an underfunded custodial health environment will never again require our need to explain why that is bad. That the comfort and strength our planet found at home will be our new global wisdom—a permanent reminder that if I must take an order let it be “Stay at Home”…and when we must, then we must be better prepared.

Other than that I have no opinion on the subject.

A surprise assault on a weakened population is an equation for disaster. In our own little corner of a worldwide conflagration, our direct relationship to those most vulnerable cannot be lost on any of us. The simple truth is we have struggled valiantly to defeat or ameliorate inferior or discounted institutional care. If circumstance demands custodial assistance outside the home, we have tried to make sure there were funds available to maximize the level of care. At this moment a return to normal is a when not if. Our 20 year campaign to blunt the force of a potential catastrophic risk will surely return with a new urgent momentum, insight into the cost of physical isolation and a recognition of the health care vulnerability of those most in need of care.
How could this historical tragedy have arrived at a less opportune time? Although this column has a tendency to overuse metaphors, analogies, parables and euphemisms, it is impossible to ignore the apparent similarities between our current national health emergency and the readiness of extended care indemnification. We are unprepared.
Let’s begin with the fact that we have a highly segmented market in terms of product and solutions. There is still prevalent product misogyny. It seems too many are enamored with the mythical transactional “Easy Button.” All too often once an advisor or, for that matter, distributor becomes familiar and comfortable with a given product genre approach to the risk, that solution becomes a panacea to all requests for protection. In my humble opinion may I explain again that all the good and all the bad of all the choices demonstrates a much safer and transparent fiduciary responsibility.
To suggest there may be confusion in the field about virtually everything associated with extended care risk abatement would be a cosmic understatement. The oldest mystery is how did this progressive conversation initiate itself? Who actually called this meeting to evaluate risk and determine an appropriate response? Unfortunately we know from multiple consumer surveys it almost always begins with the consumer not the insurance advisor. What we have of course learned is that the knowledge of the need is laying there just below the surface. It is however still financially nebulous, structurally misinformed and governed by personal experience with caregiving. If a direct route to this sale were a Google Map, I would find myself perpetually lost in the middle of an obscure corn field. Maybe if we could filter the requested journey to take only main, well marked Interstate, avoid any current traffic wrecks and boondoggle projects under construction, we might be more successful.
The problem begins with genre identification. Perhaps it’s simply the mushrooming plethora of product choices. Much more likely it’s the immediate and highly negative knee jerk reaction to anything “long term care.” The market has moved on and the previously established agent base has been drastically eroded. The perfect storm of rising premiums, onerous rate increases, and restrictive underwriting has taken its toll on those willing to help.
What follows is sheer speculation. Unfortunately, there is no definitive producer sales analysis available to validate our suspicions. The following is my gut intuition and anecdotal perceptions:
Stand-alone LTCI aficionados are still correct. Directly addressing a contingent liability with a contingent solution remains good math.
Our sales to the affluent market may have held us together but concentrating our attention on those who could probably self insure if they wished is not a formula for lasting success.
Your choice of primary presumed purchase motivation can’t help but point you to a particular siloed approach.
Is the potential sale an intentional response to a family care experience opening up a new and broader horizon of possible solutions?
Is the long term care/chronic illness sale governed by a coincidental opportunity? Is this just a great bonus conversation? In other words, was there a life insurance need already on the table and what philosophy of that life transaction was at play—death benefit or internal account value performance?
Does the sale boil down to ROIs providing more powerful investment strategies?
Maybe the sale is permanently contaminated by well-known concerns and frankly indigenous to our market. LTCI has left us an unappetizing legacy…ringing in our ears should be the valid concern: “Can you actually get it issued and specifically are the premiums and benefits guaranteed?”
I have started to again carry a Rand McNally Atlas in my vehicles. Google or SIRI can never give any context or more personally pleasing options to my journey. It only takes me from one finite point to another. It excludes all esoteric or scenic alternatives.
After this temporary and historic delay in America’s future, we must be prepared to build a better focused response. The spotlight is burning brightly on America’s greatest underinsured risk. The residue of this artificially imposed sabbatical should be a better understanding of an even more visibly precarious population. We are all witnesses to a worldwide tragedy painfully exposing a vulnerable cohort based on advanced age and diminished health status. We must begin now to sort out this marketing mess and bring some order to the disarray of the past. We must finally stand ready to attack this risk with a new dedicated commitment to a much larger market. Our mantra and our mission remains constant: Those most in need now and in the future.
Other than that I have no opinion on the subject. 

The Senior housing market in terms of national ALF and NH occupancy has experienced a number of years of falling occupancy. This is a complicated market most frequently fueled by substantial yet fluctuating new construction investment. But it would be impossible to suggest it has not been a market in retreat for some time. Perhaps it’s only about following the money after all. However, I choose to believe it’s something much bigger that indeed strikes at the heart of the problem that continues to fester. The truths we carry in our hearts are that no one wants to lose control, no one wants to be institutionalized, no one in their right mind would want that control turned over to an overburdened and insufficient governmental bureaucracy and when it hits the fan everyone would rather just stay home. What we of course do want is quality care as a direct result of controlling our own claims destiny. What we all want is private care!

Unfortunately, we now live in very strange marketing and sales times. We seem to have become comfortable selling a product that few can afford. In fact those who can may best be described as those same prospective consumers who use to defiantly proclaim that they could self-insure anyway. A projected brighter future for “lazy” money, the perpetual siren’s song of enhanced ROIs and dramatic leveraging visuals seem to be the new holy trifecta. Just so there is no confusion: What I am suggesting is that we have now successfully isolated the sale to exclusively those who have absolutely no chance of running out of money and falling victim to inadequate planning. Those at greatest risk have been quietly and systematically abandoned by (fill in the blank!). Pointing fingers at this point is absurd. Circumstance becomes history. The blame game at this point is an insult to all concerned.

As has been frequently advocated in this column, we simply got fixated at doing what we have always done as insurance professionals. We measured a real and sufficiently frequent catastrophic risk and for over 20 years we attempted to do battle with that Monster. In the beginning, without sufficient experience at killing dragons, we may have overestimated the ease and prospective efficiencies of dragon slaying. The beast was larger than originally estimated, the cost of effective weapons exceeded our expectations and frankly the dragon was much harder to kill than we thought. As these inevitable realties became increasingly self-apparent, costs rose and markets retreated. Fewer dragons killed, fewer candidates as apprentice dragon slayers, and killing dragons drifted into an exclusive pastime of the landed gentry and idle rich. The pull toward the new world order was inexorable and perhaps unavoidable. The net result is a much wider market gone stale from lack of activity.

The net residue is greater risk from dragon’s breath for the majority of Americans as we have systematically and perhaps inadvertently abandoned those unable to obtain total protection from the dragon slayers guild to protect against the whims of aberrant dragon behavior. Now to the point. We must ask ourselves: Do we have any responsibility for a situation that will ultimately result in the demise of the dragon risk termination business? Must we continue to adhere to the myopic view that every dragon on the horizon must be slain? Why can’t it be enough to simply provide sufficient support to influence the behavior of the beast by enhancing your own personal resources. Must every potential attack on our homes be perceived as a conflagration of dragon fire? Fifteen years ago, when a million Americans bought dragon protection, it represented a market consisting of those who wanted to shift the risk entirely to the dragon slaying companies both for those who could afford to run out of money and those who could not. This privilege has been lost. Dragons do not scare me, but I would like to be able to just be more careful and better prepared to defend myself where they are concerned.

Other than that I have no opinion on the subject.

A well known, much respected and dear friend BGA asked recently if I could provide some basic financial planning math concerning the relative premium impact of LTCI premium on discretionary income. This is a classic DI argument, why would it not apply to what producer surveys suggest is an even harder sale to make? The response was as you might expect—that he might be asking the wrong question. The uncomfortable truth is we now sell protection almost exclusively to the affluent. If our primary sale is to those who could truthfully financially withstand the risk on their own, what difference does it make anyway?

He then explained that the old LTCI statistics would no longer gain any traction and that he was making a presentation to a financial institution where he needed to demonstrate the wisdom of an asset-based leverage sale and consequent improved ROIs. The fact that he was absolutely spot on in today’s limited sales universe brought me up short. Have we really come to the point where this sale is no longer about risk abatement but only the professed “two-for” brilliance of repositioning underperforming stagnant assets?

There were many among us who were never big fans of statistics. We always knew the great and vast majority of Americans would eventually get caregiving obligations on their boots. The facts are immutable. The overwhelming majority of us will need care at the end and a significant number of those will experience a catastrophic financial hit. The prevalence of emotional and financial conflagration caused by extended caregiving has become an unavoidable placeholder in all planning conversations. The only available answers are: Will you attempt to build an insurance wall to protect your family and yourself, or consciously choose to absorb the blow yourself, or plan to deflect the hit long enough to manage control of its intensity?

Don’t misunderstand. We should all be grateful that the market is now finally heading in a direction that, in my humble opinion, creates a more form fitting resolution of the true nature of the risk. The actual cost of the risk itself has continued to fall on a net premium basis. Specifically, it is not a potential certainty but only a likely contingent possibility. A solution that guarantees a benefit and provides alternative outcomes for it’s owner, whether attached to an annuity or life base, simply accomplishes a better and more cost effective fit.

It is impossible to not repeat a number of popular themes in this column. Therefore, again for posterity:

The built in prejudice in all our conversations must be directed at those who choose to do nothing. Product choice is at an all time high.

It remains our fiduciary responsibility that when confronted with an opportunity to address this specific risk we must offer and hopefully explain all the good and all the bad of all the choices.

Confining your solution options exclusively to only one flavor of policy option is myopic and self-serving by definition.

Asking what the net risk cost to the client is will get you closer to the truth about the cost of chronic illness and how best to more directly provide protection.

If we continue to restrict our sales to the affluent, we will doom our continued participation in providing insurance solutions.

Sales have been stuck for many years at about a half million Americans purchasing something to attempt to brunt the full force of the storm. The only way to move the needle is to loudly and forcefully proselytize the ability to solve the risk`on a supplemental basis. We must change the conversation from, “How much do you need to prepare for a catastrophic contingency?” to, “How little do you need to add to your monthly cash flow to provide a sufficient buffer against losing control of your own claim destiny?”

Is that all there is?
Is that all there is?
If that’s all there is my friends, then let’s keep dancing.
—Peggy Lee, 1969

Other than that I have no opinion on the subject.

“Everybody wanna know the reason…without even askin’ why.”
—Albert King, Everybody Wants To Go To Heaven, Lovejoy, (1971)

It should be more than a hindsight rationalization. It must be more than a justification of expense. Sometimes it just seems like a child has wandered into the room and picked up a telescope and peered into a new reality from the wrong end. Consider this column a formal complaint. What we cannot escape is a market where the number of new participants each year has remained relatively constant. Frankly, for more than a dozen years it has not been merely static—it is calcified and stagnant. We continue to fumble with after-the-purchase analysis. In the last six years we have gone from 90 percent individual health insurance to 90 percent individual life insurance driving the sales bus. If we are ever going to get this sale off of dead center we must do a better job of asking the right questions about what has happened and what needs to be reformed.

Obviously our industry has engaged in trying to determine why someone might actually buy. The companies do engage focus groups to try to analyze potential buying behavior. Traditionally asking some version of, “What type of product or benefit would convince you to buy?” A cursory attempt is also made to determine what primary factors might influence a prospective buying decision. And the most obvious predisposition/glass ceiling: Cost is universally “sized” up. Price does matter and understanding the relationship between a known risk, a proposed value proposition and a commitment to buy lies at the heart of any possibility of ever getting sales to provide more protection to more prospective consumers.

What we do most times, however, is conduct a sales post mortem after the fact. This is always seriously contaminated by cognitive dissonance. Frankly, asking someone why they bought, or for that matter did not buy, is frequently an exercise in a self- fulfilling prophecy. For example, consumer research begins with the obvious why: “Did you make a wise financial decision?” Who among us would not come to attention and proudly proclaim their personal brilliance in that regard? Unfortunately, formal analysis then usually begins to justify its own predispositions. We had created a product to respond to perceived market need and it was purchased. Certainly it must have been because of the beauty and wisdom of its structure and intent. Let’s just consider our historical review of the obvious. “What was the number one reason (by survey) that someone bought?”

Beginning over 15 years ago the number one reason gleaned from consumer survey analysis was financial wisdom taking specific and definitive action to protect assets and legacies. Slowly but surely the truth just under the surface has begun the bleed-through. The sale most frequently comes from a personal and experiential confrontation with the real burden of caregiving. Forgive me for suggesting it could never have been revealed from any source other than those who actually make the sales. It is specifically the fear and recognition that the unpleasantness that they have witnessed in their own extended family could happen to them.

Could we possibly be asking the wrong folks about what happened or, more importantly, what needs to happen? We know that the largest billboard on the busiest highway will not sell long term care risk abrogation. This remains the toughest consumer sale to make and it continues to require personal effort and expertise. We have seen a very dramatic shift in the location of this sale. What we have not seen is any analysis of how, by whom, and under what circumstances these new sales are taking place. The so called LTCI specialist is on the endangered species list. Those financial advisors only very recently in opposition to traditional sales now seem to be leading the sales parade. Frankly troops, we need to know what the hell is really happening out there. How is the conversation now begun? How are potential product directions determined? Where is the most significant sales emphasis being placed? Is it a primary, contingent, incidental or supplemental sale? Not only is the product landscape changing, the vendor response is in major upheaval. Nursing homes and assisted living facilities continue to have falling occupancy. Not only is the public boarding up their front doors to remain at home, it may end up being customized versions of ALEXA and SIRI that become primary caregivers in that home. Even suggesting that technology would be our greatest weapon in this struggle would not have been on any one’s radar in the recent past. Home care has the only real opportunity to hold down cost and coincidentally it is what everyone would prefer. How is this new reality embedded into the sales transaction? In other words, please do not tell me once again how to count my chickens after they have hatched—particularly when you can’t even tell me the location of the hatchery!

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

Human nature continues to get in our way. But of course this perpetual uphill battle defines our chosen profession. What I would like to suggest is that this remains a double-edged sword. Perhaps the greatest flaw in our sales history is the propensity to sell what arrived in our briefcase at the moment of a sales presentation. Convenience and expediency continues to threaten our basic fiduciary responsibilities.

Let’s begin with the largest mystery that clouds current sales results. Combo life sales will represent 90 percent of extended care risk solutions in 2019. But what was the true nature of that sale? Was it simply a traditional life sale with long term care/chronic illness furnished as an “add on,” or was it offered as a direct alternative to a request for help with that specific risk abatement? Was the sales conversation a comprehensive one in which all alternatives were described and offered?

My concern is simply that we cannot clearly identify from existing research or sales trends how and why a sale took place. When we stand confronted by a clear future risk that the consumer probably originated as an insurance conversation—what happened next ? We assume at least some level of basic financial analysis and planning takes place to justify insurance need and premium commitment suitability. Now how does that translate into a specific product offer?

Here’s what we do know from Broker World surveys and LIMRA Life Combo Review:

• The Upper Middle Class is virtually the only recipient of our sales efforts. Stand alone sales correlate directly to assets and income.
• The affluent tend to buy asset-based products with “lazy money.”
• Most consumers do not plan to consider long term care planning until at least age 55.
• Conversely, consumers under 55 are more interested in combo life.
• Producer preference is also clear. Long term care specialists prefer stand-alone as the best premium leverage. Financial advisors favor combo life and asset-based advisors favor single premium, while life insurance sales professionals prefer chronic illness riders as a sales enhancement.

I have participated in a number of “live” agent training sessions with a focus on all methods of confronting this risk and the largest contingent of those in attendance are those who “used to sell LTCI.“ What now lies at the heart of new sales? What, if any, are our responsibilities to describe alternatives and how each one might address a consumers specific risk abatement? I can visualize in my dreams a producer coming to that proverbial fork in the road with multiple choices and trying to evaluate which choice will lead them home safely and expeditiously.

I understand that the logical choice must be the one with which they have the greatest knowledge and familiarity. However, I would be remiss if I did not point out the obvious—that this prejudiced decision process may not have occurred in any one’s best interest.

I am also not convinced that intentionally restricting sales to those least vulnerable to the financial ravages of a need for extended custodial care serves our universal desire to reduce this potential risk. Confining our sales efforts almost exclusively to the most affluent is, first of all, a diminishing resource and, more important, does not in any way open up future sales. Furthermore, if we do not add an aggressive supplemental sales approach to the risk, we cannot drive this sale deeper down into the middle class. In other words, our goal must be to do all we can to help maintain private pay status for all the consumers we engage. Adding a smaller cash flow to existing retirement income instead of defining every sale as a catastrophic risk that must be covered by a large insurance commitment must become our new mantra.

The bottom line is that comfortable, convenient and familiar should be declared public enemies. A demand that sufficient planning must precede any advice on product direction, complemented by an open mind containing the professional flexibility required to justify those decisions. All possible choices must be hard wired into our behavior if this is ever to become anything more than a boutique sale.

Other than that I have no opinion on the subject.

A very short 16 years ago the promise of stand alone LTCI was shining brightly. We had directly addressed a pressing need with the help of a clear cut legislative mandate. Over a hundred companies had flocked to our cause. Sales growth had been steady since HIPAA. In marketing staff meetings across America we congratulated each other on our marketing wisdom and optimistically predicted continuing successful growth. And then quite frankly our chickens began to come home to roost. There was simply much we knew and conveniently misplaced in our minds:

• This was health insurance after all and would be subject to claims experience. I remember vividly standing at the first ILTCI Conference at that initial cocktail gathering hearing many wish we had more claims experience. Careful what you wish for.
• We knew sales drift to more affluent customers as time goes by. We knew big premiums and big commissions were a well known and potentially dangerous siren song, but the music was so sweet we could not resist.
• We knew this was a contingent liability but the cost for catastrophic coverage was so competitive when measured against the potential risk, why not just sell life time benefits with five percent compound inflation protection? And so we overloaded the boat.

In fairness, there was also much we could not possibly have seen:

• The persistent failure of Medicaid to provide quality care.
• The rise of expensive private pay facility care vendors.
• The historically unique love of these new policies once purchased.
• Market pressure to enhance and perhaps over sell non-insurance benefits.
• The reality that adverse selection lies at the heart of this sale. Those most anxious to buy see the genetic handwriting on the wall.

If this is beginning to sound like a post mortem, it cannot be helped. Beginning 15 years ago the earth beneath our feet began to shift. As premiums rose, as a reflection of the items outlined above, sales have fallen year after year. Last year the LIMRA numbers for individual LTCI sales were dismal and disheartening. No amount of optimism can reanimate the reality of the numbers. This year fewer consumers will buy stand-alone LTCI than fill a college football stadium on any one Saturday. To put it in perspective, that is how many lives were sold by the top 23 companies in the first quarter of 2009—just ten years ago. Just a couple of fast observations before we move on to what is selling. The strength of our best years came from corporate premium deductibility and advanced modal premiums, and they are still standing there with open arms welcoming potential customers., Much of the stability and promise for growth came from worksite sales now desperately in need of a rebirth and innovative strategies for combo sales in this arena.

Now for the good news: This year we are approaching half a million buyers of some form of combo life policy. There will be plenty of future grist for the mill in this column. Perhaps the number that jumps out of the 2018 LIMRA numbers is that recurring premium policies grew to 93 percent of all sales in 2018. We are clearly seeing a desire on the part of the mass affluent to take advantage of this extended care risk approach. Although combo UL represented two thirds of all combo sales, it was whole life that showed the greatest statistical growth. Guarantees do matter. Long term care IRC 7702B and chronic illness IRC 101g were equal at just above 40 percent each with asset based extension of benefits making up the difference in premium although representing the largest number of new policy holders. Frankly we should like everything about this solid and hopeful growth:

• Premiums are stabilized and predictable.
• Structurally, as a rider, the risk occupies its correct location as a contingent “possibility” not a catastrophic certainty.
• Net cost for the risk has been dramatically reduced.
• There is no reason this should not be a part of every sales conversation. Fiduciary responsibilities are direct, visible and certain. Omitting this conversation becomes increasingly perilous.

It is here that we need a quiet and reflective prayer:

“May we be blessed with the wisdom to not relive the past. May our mission to guarantee future private pay status be much clearer and our potential customer base be much greater. May the companies with the courage, stamina and patience necessary to develop not just new product but a new and vibrant middle class market please step forward into the light!”

Amen.