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LTC Insurance:

Where We’ve Been….and Where We’re Going

Betty Doll, MBA, CLTCDoll & Associates Long Term Care Insurance Services

Asheville, NC

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The Premise

Long term care insurance provides policyholders peace of mind that

there will be additional funds available to help them pay for the

type of care that would otherwise fall mainly on family members and

friends.

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What is the history?

• Policy around since late 1970’s

• Many early policies mirrored Medicare coverage

• Many early policies were nursing home only policies

• No standardized benefit triggers

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The Constant Message

• People need care! Families often can’t do it.

• Care costs money!

• Paying for care is a hardship for most people.

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1980’s

• New types of care—assisted living more popular• Different levels of care emerging• Home and adult day care became more popular• “Over utilization” within Medicare system• LTC insurance becoming more mainstream• RWJ Foundation study resulted in concern about

long term viability of the Medicaid program—first Partnership programs enacted

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Sales

• Age of buyer

• Rate charts, brochures

• Flip charts

• Focus of features of the product

• No suitability forms

• Easier underwriting

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The Constant Message

• People need care!

• Care costs money—the government can’t cover it.– Medicaid already seeing problems

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1990’s

• NAIC Model Act of 1993

• HIPAA 1997– Standardized policy language– Created TQ and Non-TQ Policies

• Lots of debate in the industry re: TQ vs. NON-TQ

• Consumer Reports names PennTreaty as best LTCi company

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Sales

• Seminars

• Flip Charts, rate cards

• Fax machines

• Focus on “odds of needing care”

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The Constant Message

• People need care

• Providing care causes many types of challenges for the family

• Care costs money– Medicare doesn’t pay for it (but was more

flexible in early 90’s)– Becoming more difficult to qualify for Medicaid

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Industry “Buzz”

• Lots of debate in the industry re: TQ vs. NON-TQ

• Talk of standardizing pre-packaged policies

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• Federal government giving tax incentives for those who purchase TQ policies

• Many states also enacting tax incentives

• 1993 OBRA halted further development of Partnership

• What’s the message???

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2000’s

• 2003 NAIC Model Act

Primarily addressed rate stability– More difficult for policies issued since that

time to raise rates– Companies must disclose history of rate

increases– Actuaries must sign off on pricing

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Sales

• Laptops

• CD ROM presentations

• Stand alone software—spreadsheeting

• Meet in office rather than client homes

• Do Not Call list

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Federal LTC Program

• Spike in overall sales

• Competition?

• Free publicity?

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2006

• Deficit Reduction Act– Severely restricted Medicaid planning

opportunities (5 year look back)– More attorney’s recommending LTCi– Opened the door for further development of

Partnership Programs

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• CNA gets out of LTCi

• Allianz gets out of LTCi

• Transamerica gets out of LTCi (and then gets back in again)

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The “Buzz”

• LTC Partnership Programs

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The Constant Message

• People need care

• Families can’t do it all

• Care costs money– Harder to qualify for Medicaid– Medicare restricted to skilled care– Government giving “incentives” for those

purchasing LTC

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The Buzz

• Group LTC

• CLASS Act– Competition? Free Publicity?– Now repealed– People still need care– The government again saying they can’t pay

for it

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2010-2011

• Sections of Pension Protection Act became effective 1/1/10 gave some tax advantages to products linking LTC with life and annuity products

• More carriers offering these products

• MetLife gets out of the business

• John Hancock has massive rate increase

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2012 “The Buzz”

• Linked Products– When do they “fit”? Niche product– Single premium is not affordable for most– Low interest rate environment makes them

less attractive than they were

• Unum exiting group market

• Prudential exits the individual market

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The Constant Message

• People still need care

• Care still costs money

• Something has to pay for it

• Companies more innovative with products– Short term policies– Cash and cash alternatives

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Sales

• Screen sharing presentations

• Tablets

• Fuzzier predictions on cost or need

• More use of social media

• Carriers focusing on reaching middle market—short term products

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Changing Philosophies

• Don’t try to cover everything

• Some is better than none

• Encourage co-insuring

• 3 years of coverage will cover a lot of claims situations

• Maybe 5% compound isn’t needed—what are other approaches?

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Lifetime Coverage?

• “But what if I get Alzheimer’s and don’t have a lifetime plan?”

• What if you get Alzheimer’s and don’t have any coverage?

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We Are Survivors!

• There is work to be done!

• 10,000 baby boomers turn 65 every day

• Less competition– Fewer carriers– Fewer agents

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More Solutions or Fewer Solutions?

• Medicaid

• Medicare

• Partnership

• CLASS

• Linked products

• Self-insuring

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The Constant Message

• Many will need care

• Providing care comes at a cost to families

• Care costs money

• Something has to pay for it

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Sales

• LTC Sales were up 13% in 2010 over 2009

• In 2010, 68% bought a 3 year benefit period

• In 2010, 95% bought a 90 day EP

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What Works in Sales?

• Consultative rather than “sales” approach– Less presentation, more conversation

• Collaborative design of policy

• Internet leads

• Internet sales

• Professional networking/COI’s

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The NEED is Constantly Growing

• Seize the opportunity

• Focus on the unique value proposition of the flexibility in LTC products

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We provide the solution to a

problem that is growing rather than

diminishing!