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!