My, how things change. Probably no insurance product has gone through more changes and variations than long term care insurance (LTCi). Clients used to routinely buy lifetime coverage with a 5% compound cost-of-living rider and limited pay policies were all the rage, but today that landscape has changed. Most policies sold have a benefit period of 3 to 5 years and the 5% compound cost-of-living adjustment (COLA) rider is all but extinct. Limited pay policies are history. Rates have gone up, many carriers have exited the market and those that remain have tightened up on underwriting so hard that many agents just gave up trying to write LTCi. But all is not doom and gloom if you have the right tools in your briefcase.
Even though traditional LTC is getting tougher to sell, there are products entering the marketplace that can provide coverage for your client. These policies can cost much less than traditional LTC and can be issued without all the underwriting hoops. In fact, with so many products available you shouldn’t have to walk away from any meeting without an application. Let’s take a look:
Traditional LTC – This is still the cornerstone of the industry. However, with carriers leaving, increasing rates, strict underwriting standards, long underwriting times and special CE requirements, many agents shy away from it. Because of these trends the average age is getting lower and the policies are smaller. Also, with the trend towards gender-based pricing, many people who could have been clients just 5 to 10 years ago are finding themselves priced out of a policy.
Hybrid LTC – These policies are combination life/LTC or annuity/LTC—perfect for the client who says, “What if I pay into this policy for all those years and never use it?” Unless your client has figured out a way to live forever, someone somewhere is guaranteed a benefit of some sort. The downside is the client usually has to have a significant chunk of cash to put into one of these, which takes it out of reach of the “average” client.
Short Term Care – A short term care policy offers coverage for one year or less. With just a handful of carriers currently in the STC market, they can be tough to locate. Naturally, STC is more affordable and the underwriting is much easier than traditional LTC (usually 10 or 11 health questions on the app). Some carriers do a phone interview—others do not. Some do a cognitive interview—some do not. Some carriers will care if the client has been previously declined—others do not. When you consider that the largest LTC carrier says that 43% of their claims are for less than one year, this coverage becomes very relevant.
Guaranteed Issue Home Health Care – Yes, Virginia, there is such a thing. With just a couple of qualifying questions (“Can you do all of your ADLs? Are you currently in a nursing home?”), these policies can be a godsend for those who can’t qualify for any other coverage. Their benefits are limited in scope, but you are still giving your clients something they didn’t have before you walked in the door.
High-Risk Long Term Care – Personally, I only know of one carrier in the market who is actively pursuing high-risk clients. They’re not in every state and they’re not “A” rated by A.M. Best, but they have an excellent track record and many products to choose from. For the client who has complications from diabetes, early Parkinson’s or early multiple sclerosis, it’s an option they otherwise wouldn’t have.
Your clients rely on you to shop the marketplace and look out for their best interests. So whether a client is young or old, rich or poor, healthy or not, there is a product for them. Some of these products will become mainstream in just a few years. You’d be smart to get ahead of the curve now. Pick up the phone and call all of your clients who were previously declined and say, “I need to come and see you right away. There’s something new I think you should know about.”
You’ll soon become your own best lead generator.