Turn Over Every Stone

    The readers of this column I am sure understand that I make a living outside these musings and frequent pontifications. As a consultant I have been primarily involved in product development and wholesale brokerage distribution strategies directly associated with long term care insurance for over 20 years. The comments this month may be a little strident, created by a growing level of frustration generated by our 20 year lack of market penetration success. Because of our consulting relationships over the years, I suspect my partner Barry Fisher and I may  hold the record for executed Non-Disclosure Agreements.  It needs to be clearly understood before reading further that we are currently under contract to provide our normal responsibilities to one of the major companies involved heavily in the market outlined below. After almost 15 years of writing this column with all of the knowledge and passion I could muster, we would want it clearly understood that our involvement and the views expressed below come as a result of our desire to help direct life settlement buyers achieve goals that we believe are ethically consistent with what we believe is an unavoidable acceptance and acknowledgement  of our fiduciary responsibilities.

    We believe:

    • Americans are virtually unprepared for retirement much less the insurance funding of the real cost of caregiving. It is negligent and remiss to ignore the current life insurance secondary market as a resource for funds needed for care and retirement support.
    • We have been unable over the last 20 years to convince insurance consumers to protect themselves and their families—20 years ago 8 million owned a policy and today 8 million own a policy. The only thing to point to with any degree of certainty is the atmospheric rise of average premiums and the personal pride we must have in knowing we are only now even attempting to protect the wealthiest among us. As has been mentioned frequently, we have left over 50 million Americans behind totally unprepared for what we know as an almost certain  and potentially catastrophic need for financial assistance with custodial care.
    • We believe that there must be a  residual responsibility to those we left behind. For whatever reason those who did not adequately  plan ahead cannot now be beyond your concern or professional responsibility.
    • All possible funding sources must be exhausted; reverse mortgages, underwritten SPIAs, veterans benefits and the sale of life insurance policies for care and retirement dollars. Didn’t it ever strike you that those experiencing the greatest degree of mortality and morbidity issues and therefore anticipating the possibility of a lengthy journey though the inventory of expensive care vendors would have similar underwriting concerns and futures? If there was ever a homogenous cohort of need (and prospect for your services) it would be those facing a progressively diminishing ability to perform their ADLs!
    • Although again, as stated repeatedly in this column, there have always been two potential customers. Those where we have unfortunately almost exclusively applied all our sales efforts—meaning the ones who can afford to replace the risk with insurance, and those who we can help supplement and enhance the assets and income they already have. But there must be only one goal: Remain a private pay patient if at all possible.
    • This column also continues to beat the drum of enhancing your policy review practices. Do not wait for the frantic call for assistance with someone already at the point-of-care need precipice. Examine your own book of business for those clients based on age, family history, previous adverse underwriting, pending term conversion deadlines, obsolete second-to-die strategies and a “known” lack of an adequate chronic illness strategy.
    • Regardless of your philosophical opinions concerning the secondary market, the National Association of Insurance Commissioners Long Term Care Innovation Subgroup on July 19, 2017, wholeheartedly endorsed and recommended the use of life settlements as a key component of “Private Market Options for Financing Long-Term Care.”  

    Not including a review of policies  both now  and in the future that could be used to help fund care and supplement retirement has been accumulating a mounting collection of agent adverse case law. Be forewarned if you ignore your fiduciary duties—three lawsuits brought by life insurance policy owners against their insurer and advisors for not disclosing the settlement option have been settled since 2011.

    In Texas we know you can lead a horse to water but you can’t make him drink. As an old cattleman, I was always told if you looked deep enough into the horses eyes you could see their intelligence. I was never convinced.

    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: ron@icefloeconsulting.com.