The truth will set you free. Perhaps we have all spent too much time dancing around recognition of the painfully obvious. This column has often succumbed to its own forms of subterfuge by employing contrived parables, questionable allegories and tangential comparisons. As one of the world’s unabashed eternal optimists, I may have let my feeble attempts at humor sugarcoat what must be said.
The future of LTCI is actually very clear. The wealthier consumers will continue to have the option to solve a known and quantifiable risk with insurance. The poor will continue to have a social safety fall-back position. And the incredibly underinsured vast economic middle will eventually find they will be participating in some form of benignly coercive partnership between public and private funding sources. Our professional involvement will include providing risk leveraging options for the wealthy, supplemental choices for the middle, and every time we do so, knowingly offsetting the taxpayer burden of the social safety net.
Private insurance is currently paying billions in claims, and we have potentially already pre-funded hundreds of billions more. However, our lackluster market penetration simply reflects our approach to the sale. It is also true that when you isolate and aggregate all “chronic illness” sales data for the more affluent, our market penetration record is much brighter. Unfortunately we continue to react to the symptoms of the problem instead of doing the hard work necessary to accomplish our goals. In our hearts we know LTCI has always been riddled with blatant or suspected adverse selection. Even when the primary motivation to buy is a family experience with caregiving and not a hidden health issue, there is most likely a clear premonition that they may be next. The corollary reality is that those who most actively seek protection have helped define an industry-wide negative self-fulfilling prophecy of early and lengthy claims, excessive persistency, poor placement ratios and flat sales.
Everyone knows this! Why do we continue to hesitate to take action?
While we are at it, perhaps a short litany of universal truths is in order:
• Medicaid must find its own truth. Eventually settling for its original intent. That and no more.
• Medicare is already chomping at the bit to cover more home health care. Publicly mandated payroll deduction strategies to pay for it is the most likely scenario going forward.
• Combo policies are not a panacea—only a supplemental solution tool. The shortest distance between the risk and the claim remains stand-alone LTCI.
• Asset-based policies should only involve discretionary dollars.
• If there is a need for life insurance, adding a chronic illness/long term care rider makes perfect sense.
• Combo annuities will, in my humble opinion, ultimately be the lowest net cost cork that floats to the surface.
• There is still great potential for a 1035 firestorm, and I am seeing signs of brush fires off in the distance.
• We know you can wake any good disability income agent up in the middle of the night and they will tell you in no uncertain terms that DI must be sold. Not to shock anyone, but LTCI is a kissing cousin to DI.
• LTCI must be sold for exactly the same reasons: It’s cheaper when sold earlier. Putting insurability in place before health turns corners and it’s too late is critical. The need is real. The risk is real. Premium is always cheaper than claims.
• And the bottom line is that when you “make the sale” (not just take an order), the client and his family will always be grateful, and you will have satisfied your professional fiduciary responsibilities. If you don’t want to do it personally, then work with a specialist who can help you protect your own book of business.
The remaining LTCI companies need to rededicate themselves to selling, sooner rather than later. Younger, healthier clients are more than just good business—it’s our survival.
It also must be said: The entire insurance industry—all disciplines included—needs to get up off its dusty recalcitrant posterior and, in their own best interest, try to be helpful. In particular, life and health companies must stop waiting for someone else to solve the problem that can adversely affect all insurance transactions and help us focus on one straightforward theme. LTCI must be moved from the back of the line to the front—as a prerequisite conversation for all those other important insurance decisions.
Our redemptive slogan must be chiseled across the foreheads of our nation’s most progressive leaders at Mt. Rushmore: SELL LTCI FIRST!!
Other than that I have no opinions on the subject.
