An old friend recently reminded me of an even older joke: How do you get down from an elephant?…You don’t get down from an elephant, you get down from a goose!
In many ways the pursuit of the LTC insurance sale has been paved with good intentions yet impaired by a quest for easy answers. It seems that even wrong answers—if they appear logical and simple—can take on a life of their own.
Maybe it’s because an LTC insurance sale defies easy answers. Quick quotes and spreadsheets do not have any place in this transaction. The product has many moving parts and underwriting concerns remain an impediment.
Perhaps the most obvious restriction to mainstream critical mass sales has been our lack of sufficient numbers of proselytizers who encourage clients to protect their families. Maybe the revolving doors of carrier participation, underwriting brick walls, abrupt rate increases and constant product evolution just makes it too hard for too many agents.
The overwhelming psychological need for easy answers even shows up in office supply commercials. Now that we live in a world of multiple alternatives to managing this risk, the pent-up desire for easy answers continues to surface.
A recent example is the addition of chronic illness accelerated death benefit riders to universal life policies. These riders are often referred to as living benefit riders. When an insured cannot perform two of six activities of daily living or is cognitively impaired, the death benefit can be paid immediately under IRC Section 101g. Because these riders are not technically long term care insurance, some have suggested that NAIC/Partnership certification is not necessary or required, theoretically making their sale easier than that messy old LTC insurance under IRC Section 7702B.
Apparently those involved are not familiar with the proverbial duck theory. If it walks like a duck and talks like a duck—it’s a duck! What’s more, three state boards of insurance (Florida, Kentucky and Hawaii) have already come to this conclusion. This obvious recognition of fact is also pending in a number of additional states. If you use a HIPAA tax-qualified claims trigger (two of six activities of daily living or cognitive impairment) and you then adjudicate and pay claims as any other LTC claim, that is long term care insurance.
We now have multiple choices every time we sit down to have this conversation: stand alone LTCI, chronic illness accelerated death benefit riders, extension of benefits LTC riders, combo annuities as well as single and level premium life strategies.
I can already hear the easy answer chorus begin to warm up. Some actually believe they can pick their favorite approach and allow that reduction in logic to become their new universal answer to every long term care need.
These are not separate solutions each existing within its own vacuum. Each is a tool of equal value ready to best address the specific needs of individual clients.
Easy answers are not available. Nothing about LTC insurance is easy—it is hard, but it is also very important. The elephant in the room will not go away.
In a conversation with another LTC insurance veteran, we asked each other again why we continue to beat our heads against this particular wall. As the readers of this column know all too well—it’s because we care. Now there’s your easy answer!
Other than that I have no opinion on the subject.
