Ronald R. Hagelman

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.

Impossible not to envision a classic movie version of the damsel in distress tied to train tracks with the sure and certain speeding train barreling down the tracks, steam belching from the smokestack and whistle blaring in a futile effort to prevent an inevitable catastrophe. The problem is, here we are 20 years since HIPPA and we still cannot get a clear vision of what that potential hero hopefully coming to our rescue looks like or if he or she even exists. The potential ugliness of the risk grows larger and continues to resist any amelioration designed by mere mortals.

Forgive the painfully obvious—insurance is about intervention. It is about intentionally restructuring the potential outcome of highly likely adverse future possibilities. It’s not terribly encouraging that:

• The percentage of those individuals with insurance is falling, looking more like less than seven percent.
• It appears we are simply churning product options from over a 100 stand-alone LTCI options fifteen years ago and now approaching a 100 combo options of one flavor or another. Clearly as one choice lost ground the other rose from the ashes. The problem remains that we have not moved the needle. Even though the battle plan may have shifted, unfortunately the number of Americans trusting insurance and buying some form of protection remains ominously flat.
• Our aging population continues to rise like a mushroom cloud with the U.S. Census reminding us that the 65+ population will grow by 70 percent over the next 20 years—and half of them will need formal care.
• Compounding the impending train wreck is the vanishing inventory of available caregivers. The cost is simply too high. Personal income of caregivers is directly impacted about one third of the time and almost two thirds had to invade savings or retirement income.
• The overall financial health of our seniors is also seriously anemic with limited savings and rising senior bankruptcies.
• Public support programs are also sputtering out with Medicare Part A scheduled to run out of money in 2026.
• Stand-alone LTCI sales fell off a cliff in 2004 and have been rolling down hill ever since. Which creates a corollary outcome, meaning available potential distribution to solve the problem began to vanish simultaneously. The most frequent agent I meet on the road is the one who “used to sell LTCI.”
• Individual LTCI health sales are 80 percent-plus concentrated at two companies—one brokerage and one career. Monopoly by default may not be in anyone’s best interest.

Let’s save speculation about where we go from here for another column, focusing on what’s at hand: The “Rise of the Combo.” Here it is impossible not to envision the most recent re-incarnation of Godzilla rising from the radioactive ocean floor, but not being sure whether the monster is coming to town to do good or evil. This representation of our fears is hell bent on something. Unfortunately, we all suspect that it may be only the immediate gratification accomplished by demolishing existing structure. Meaning, simply, we have to stop reinforcing the corporate zero sum marketing game perpetually reflected in LIMRA production numbers. There must be a way to break out of the futility of reliving past performance. Walking away from the status quo is revolutionary by design. For example:

• If men claim earlier and shorter than women, why don’t premiums more substantially reflect this obvious truth?
• If 70 percent of the risk is less than $50,000 and only 12 percent exceed $250,000, why aren’t products built to conform with the reality of the risk structure?
• If the lowest cost for any risk floats eventually to the surface, why haven’t pay as you go 101(g) riders costing only about three percent of premium flown off the shelf?

These and many more mysteries continue to plague our thinking. We not only need to think outside the box, we desperately need to recycle the box and imbue it with the structural stamina and courage of long term commitment necessary to transform a private insurance alternative.

Other than that I have no opinion on the subject.

As a product consultant since 1988, I have been involved in the revision or creation of over 50 new insurance products with 16 insurance companies. I mention this not to boast (as I will never reveal the ratio of past successes to failures ) but only to legitimize my right to ask the most important question present in this whole process: “How many times can you tell the field that your newly polished and filed policy form is meaningfully and measurably “new and improved”? And then expect them to be gullible enough to believe in the frothy hyperbole that comes with product introductions, when in truth it may often be just more of the same. We know that when you stop and think about the philosophical core of wholesale brokerage it is centered on eternal hope and perpetual policy introductions. We are most often the originating source of benefit creativity and product design innovation. We have always had greater purpose than to just take expedited orders for products hopefully sold in volume on historically thin margins. Our ability to continually adapt and reform our product approach has consistently benefited the American consumer. The net result over time has been more competitive product cost and more form fitting benefit to risk product emphasis. In my humble opinion nowhere has this been more self-evident than in our perpetual, ongoing quest to solve the chronic illness conundrum.

I remain a proud card-carrying member of that stalwart cadre of hardheaded extended care specialists. A plain and simple truth pushes us forward each day. We know the risk is bigger than publicly perceived. We know the potential for catastrophe is measured in more than the decimation of financial reserves. We know that statistically inevitable predispositions in terms of available caregiving resources will sink many more boats than our customers recognize. We also know that the only glue that can possibly save all our posteriors is more insurance.

• As stated in earlier columns, my consulting partner and I have been asking “Why can’t we get this right?” for too many years. Perhaps it’s the more basic questions that need our attention first:
• What chronic illness problem are we solving for?
• How big is the problem?
• How much protection is actually enough and for whom?
• If it’s a contingent risk, why do we continue to price as if it were a catastrophic inevitability?
• Why have we never focused on the actual net cost of the risk itself?
• Why has the supplemental risk approach not gained sufficient market traction? Why do our sales efforts highlight catastrophic risk prevention almost exclusively?
• If the Partnership juggernaut was a failure, why do we continue to believe that additional tax incentives are the solution panacea?

We must free our thinking, truthfully a tall order.

This must begin with a willingness to embrace new strategies for approaching the risk for a greater number of American consumers. We desperately need new marketing ideas, new strategic sales approaches and much better defined and achievable goals. The truth is that the greatest obstacle to moving forward is the inertia present in our own minds.

My partner and I are currently helping to introduce a combo life product. The first question from our distribution friends every time is: “What product is it like?” Each time I hear that question I think my head will explode. God forbid we should venture outside our comfort zone. What if by some bizarre twist of fate it really is new and improved? Who among you would open the door and let the light shine in?

Other than that I have no opinion on the subject.

Another loose cannon in the current lexicon of confusing popular buzzwords. Living benefits began with the first cash value policy where the consumer could access their own “investment” component while still “living.” It’s history is also littered with the bodies of any benefit that took place before the death of the primary insured from accident benefits to children’s term.

Where the confusion begins to set in is the conceptual relationship with terminal illness allowances. Just for the record: The idea of present valuing an imminent death has been around from the beginning; conversations about immediate need where the inevitable was crystal clear were entertained and facilitated at home offices. Now comes the chicken and the egg conundrum as to where the fuel for viatical vs terminal illness allowances interact. Both companies and private resources understood that a short duration between a terminal health condition and the sure and certain knowledge that remaining premiums would be paid, and a death benefit would therefore also be paid, allowed for private accommodations. All that is being suggested is that the idea of funds remaining in the building may have helped fuel this dramatic expansion of accelerated death benefits aka living benefits. Although terminal illness payments may affect Medicaid and SSI benefits, they are generally viewed as a tax-free death benefit.

Terminal Illness riders are generally available on life policies most often as a “free” benefit. They also usually include a limitation as to the percentage of death benefit that is available. (Example: 75 percent.) It is important to stop here and emphasize the importance of not confusing Terminal Illness with Critical Illness. Terminal is just that requiring certification of no recovery and most often less than a 12 month life expectancy. A critical illness suggests the possibility of recovery. HIPAA dramatically expanded the conditions that could be viewed as an accelerated death benefit providing early tax-free death payments to include: Critical illness, disability income illness, nursing home illness and chronic illness. This expansion of tax-free benefits now fuels the current focus on “Living Benefits.” Initially this plethora of present value calculations followed a familiar and time tested formula: Benefit payments would be calculated by time and loss of money based on an early death not contemplated in the original mortality assumptions at the time of purchase, and, frequently, they were medically underwritten to estimate the severity of the condition and anticipated longevity.

I believe it is here that our current problems with chronic illness riders began. While this was a logical and practical approach, and the only one available at the time, that period of expediency has long passed. The long term care provisions of the Pension Protection Act that went into effect January 1, 2010, have fueled the rising combo market. In addition, recent liberalized provisions in the IIRC enhancing allowable critical illness claim trigger definitions have leveled the benefit playing field between an IRC Section 101g chronic illness life rider and a IRC Section 7702B health rider. Meaning simply about 24 months ago it became more advantageous to purchase an extended care benefit life rider on a pay as you go basis. This was of course already being done with 7702B riders after the PPA revisions on how those internal policy premium deductions for health insurance did not trigger a taxable event.

Now let’s cut to the reason for all this historical rambling. There are 70 plus companies with some form of chronic illness rider offered on their life policies and about 80 percent of those (before I go on, a reminder that this is an opinion column) simply do it wrong. At best they have chosen to not upgrade or modernize their offerings. The so-called discount method vividly outlined above is antiquated and potentially harmful to your E&O premiums. What needs to be clearly understood is that we can understand how and why they originally got there. We do not have to understand why they don’t fix it now. The often-repeated proclamation that there is “no current charge” for the rider is because you did not buy anything you can accurately measure and count on at the time of greatest need. Therefore I can only conclude the obvious—they do not like the risk. They do not understand the risk. They do not want to take any risk. I can’t make this any plainer—it is just too easy and inexpensive to fix it and do it right. If you cannot identify the actual cost or accurately predict the ultimate benefit, I would think that this is a transaction you might wish to step away from until you can. In the interim look for the 20 percent of companies who have a pay-as-you-go structure. Meaning simply that at all points in time you know exactly what the benefit costs and how much help it will deliver when required. Somehow that seems a much more practical and less dangerous approach to extended care planning.

Other than that I have no opinion on the subject.