Sincere Speculation

I have again been offered the privilege of appearing on an industry conference panel. They needed an old guy who had been around a long time and some level of recall was still available. The question for examination from a panel of veterans is the one that too often remains suppressed and therefore unspoken. The one we perhaps fear to hold up to the light. It is the conundrum which haunts all those who recognize the necessity to reform our actions and sales trajectory concerning the still looming financial miasma. What we know continues to stand before us is a staggering volume of unfunded care.

“What could we do to repeat our past successes?”

They may have been transitory and limited but we did get some things right. Let’s begin first with an acceptance of where we are now. Less than a handful of companies offer stand-alone LTCI with premium mostly beyond the reach of those who will require the greatest future support. Less than 10 percent of what we enrolled 15 years ago are able to now acquire membership in what has become an exclusive self-preservation club. Three fourths of the protection that does take place is achieved by including no current premium ADBRs. The True Group market is virtually non-existent below 500 lives where 90 percent of American worksite insurance should thrive. The great and vast majority of LTCI premium exists in a closed book of business teetering on a rate spiral black hole event horizon. Entrenched negative underwriting continues to effectively blockade premium growth. We continue to create a self-fulfilling philosophy of a third to a half of individual applications declined. In truth, in my humble opinion, distribution has also not significantly evolved. Even with the growth of financial service professionals who tend to restrict themselves to life insurance with affluent asset-based strategies, or some flavor of long term care/chronic illness ADBR, there appears to be little change in the source of most sales. The majority of our premium is still received from occasional producers where the client’s desires may have had more responsibility for the success of the sale than the agent who signed the application. The primary sources of current sales remain basically unchanged. God Bless the hard-headed evangelistic long term care “specialist” still out there successfully working qualified leads and referrals. The middle class is still predisposed to buy their insurance at the worksite even in a market wasteland of product options severely tainted by onerous underwriting restrictions. Premium tolerance at the worksite continues to fall into familiar territory of approximately $100 per month. Combo life with an available potpourri of various quality riders dominates current sales success.

Now let’s stare intently into our rear view mirrors and see what lessons or sales strategies may bear examination or repetition. We have proven historic success with:

  • Leads generated among those consumers most at risk. Those who are not apparent recipients of government safety nets or those who could easily finance their own problems.
  • Large group worksite purchase success as a result of abbreviated underwriting strategies. Guarantee issue may have incurred some black marks but modified guarantee issue fueled by virtual underwriting technologies can and does work.
  • Combo life and annuity sales have a proven track record and most early benefit limitations among the crowded IRC 101g riders has been liberalized. Who can’t sell “no current premium.” We just need to keep a bar of soap handy for those who suggest it’s free.
  • In the late 90s to the early 2000s we successfully launched a massive educational campaign advocating the clear advantages of corporate premium deductions. We proselytized 10 pay and single pay. We taught to the sale and it worked.
  • In 2004 we launched another massive educational campaign to extoll the virtues of list bill multi-life small group with minimal abbreviated underwriting strategies and within 24 month a dozen companies had successfully increased sales activities.
  • It can easily be argued that asset-based combo sales promising the abolition of “use it or lose it” and safety of premium principal has also created a summer pond algae bloom of sales among the affluent.
  • And to put an exclamation point on it, our ability to create a premium stampede (read fire sale) could not be any clearer than the recent example of one third of an entire state’s workforce running over each other to block a pending employee tax. We have not nationally sold a half million individual long term care policies for more than 15 years, yet over 450,000 were issued in a six month period in Washington State last year.

What part did we not understand?

  • Consumer designed benefits work.
  • Workplace purchase convenience works.
  • Streamlined benefit and therefore premium reductions work.
  • Surely we have not exhausted our creative and innovative skills at benefit configurations.
  • Abbreviated underwriting works.
  • Tax incentives both positive and negative work.
  • Intensive consumer education and public LTCI proselytization works.
  • Caregiving issues resonate in almost all American homes. Focusing the sale on personal caregiving experience works.

Perhaps we still do not understand all we know about this subject but we do not need Google Maps to find our way home.

Other than that I have no opinion on the subject.

Ronald R. Hagelman, CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products.

A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing “friend” of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman and his partner Barry J. Fisher are principles of Ice Floe Consulting, providing consulting services for Chronic Illness/LTC product development and brokerage distribution strategies.

Hagelman can be reached at Ice Floe Consulting, 156 N. Solms Rd., New Braunfels, TX 78132 Telephone: 830-620-4066. Email: