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LTC Bullet: LTCi Contradictions Resolved? Thursday,
June 15, 2006 Seattle-- LTC
Comment: Last week we cited
depressing statistics from LIMRA beside a rosy scenario from Claritas
and asked who's right and why. Readers
respond after the ***news.*** ***
TODAY'S LTC BULLET IS SPONSORED BY OAK STREET FUNDING.
Oak Street Funding meets the unique borrowing needs of insurance
agency owners to secure affordable financing without selling their books
of business. By lending
against policy renewal commissions, Oak Street Funding provides the
liquidity owners need to pay off debt, hire additional staff or invest
in serious marketing initiatives to propel continued growth.
For details, check out www.oakstreetfunding.com
and contact Curt Vahle, Field Sales Manager, at 317-428-3806 or
curt.vahle@oakstreetfunding.com. We
thank Mr. Vahle and Oak Street Funding for sponsoring today's LTC Bullet
and for supporting the Center for Long-Term Care Reform. To sponsor a Bullet yourself, please contact Damon@centerltc.com
or 206-283-7036. *** ***
STEVE MOSES says "I need to be in the Southwest U.S. August 21 or
22. Schedule a program for
one of those days anywhere between Denver, Houston, and Los Angeles, and
I'll do the "Brave New World of LTC" or the
educational/motivational program of your choice for your group at a deep
discount: $1,000 plus
travel expenses instead of the usual $5,000 flat fee.
And, we'll throw in a one-year corporate membership to the Center
as well." Contact me directly at smoses@centerltc.com
or 206-283-7036. *** ***
TWO STEPS BACKWARD, ONE FORWARD. U.S.
courts tend toward giving Medicaid benefits generously and severely
restricting estate recovery. Here
are two more examples followed by one that goes the other way. "ElderLaw Answers" reports that the "Illinois
High Court Rules State Cannot Recover From Surviving Spouse's
Estate" (http://www.elderlawanswers.com/resources/article.asp?id=5413§ion=3&state=)
and "High Court Rules States May Place Lien Only on Medical Portion
of Settlement" (http://www.elderlawanswers.com/resources/article.asp?id=5377§ion=3&state=)
but "Use of Revocable Trusts May Void Homestead Protection" (http://www.elderlawanswers.com/resources/article.asp?id=5386§ion=3&state=).
*** ***
JOHN WANE AND LENNY ANDERSON, both strong supporters of the Center for
Long-Term Care Reform and prolific authors, published "Lessons
Learned from Two Decades Working the LTC Marketplace," in Insurance
Newsnet at http://www.insurancenewsnet.com/article.asp?n=1&id=62079.
John Wane is president of American Independent Marketing in
Yakima, WA. Lenny Anderson is president of GoldenCare USA based in
Plymouth, MN. *** LTC
BULLET: LTCI CONTRADICTIONS
RESOLVED? LTC
Comment: According to LIMRA:
"Following three years of decline, the sale of
individual long-term care insurance (LTCI) has yet to show signs of
recovery. . . . [I]ndividual
LTCI sales continued its downward trend during first quarter 2006,
declining 10 percent based on annualized new premium.
Over 72,000 individuals purchased LTCI during the three-month
period . . ., 14 percent fewer than had purchased the coverage during
the same period in 2005." But
Claritas says: "As the
Baby Boomer generation continues its grinding march toward senior
citizenship, sales of insurance products associated with aging, such as
long term care (LTC) insurance, are also keeping pace . . . [W]ithin the
next five years the number of U.S. households that own LTC insurance
will increase from 16.5 percent to nearly 18 percent, and in the
Washington, D.C. Designated Market Area (DMA), which is projected to be
the most active market during this time, the number goes even higher -
to 21 percent." We
asked last week: "Is
there any way to reconcile the LIMRA findings with the Claritas
projections? How do you
account for the low and seemingly ever-declining sales of long-term care
insurance? Comments are welcome. Just
click 'reply,' and fire away. We'll
compile and report the best observations we receive." Here's
what some readers said: "RE:
contradictions, consider your sources.
After 35 years in the industry, I recognize and trust LIMRA
research. Who is Claritas?!
A quick Google and the 'about Claritas' tab says they're 35 years
old and are essentially a Business to Business MARKETING outfit.
I believe I'll believe and trust LIMRA's spin over Claritas' any
day." Bob
Cleaveland, CLU, ChFC, LTCIS, CSA(r), Cornerstone Financial Strategies
LLC, University Place, WA ---------------- "People
ARE buying more easily in the individual market due to their parents'
problems without LTCi and their experience when the parents DID have
coverage. It is much easier
than 3 years ago -- people just want the price and benefits like they
buy a car they needed. I
think the disparity is in the measurement.
I think a lot of folks get it as a group plan now versus before
when most sales were of individual policies to individuals. "'[T]he
sale of individual long-term care insurance (LTCI)...' is apparently
what was down 10%. How much
were group plans UP from a year or two ago?
MetLife says a lot! More
group plans mean consumers are getting educated, many get it without
questions through work, and some shop the market once they hear about it
at work and in the media. The
press seems much more positive as well now.
AARP just ran an article by Jane Bryant Quinn [http://www.aarp.org/bulletin/yourmoney/smart_with_your_money.html]
that put it on everybody's shopping list to do 5 years before
retirement. Now that's
progress!" Barbara
Hanson, CSA, LTCi Producer and former LTC provider, Felton, CA ---------------- "Reasons
for declining sales of LTC. My
observations during 15 years of LTC sales. 1)
The market for the product is younger.
Age 50-65 is the prime market.
It was much older only 10 years ago.
These people do not see the urgency.
They are not conditioned to think about the issue.
A person age 70 sees the need more clearly.
However, with underwriting being more strict and premiums being
higher, many have fallen out of the market. 2)
People act on auto-pilot. They
are in the habit/pattern of insuring for health, property and casualty,
but not for LTC. Although regarding health coverage, since most of that is
employer provided, many are in the dark about the true cost of that
product as well. 3)
People think that the risk is maybe, sometime in the distant future.
People who are 55 today still think that they are 40.
In their minds, they fiercely resist the concept of aging.
4)
The broad reality is that many people have been conditioned not to think
that their own health care is their responsibility.
With almost any other product or service, we expect to pay for it
ourselves. However, with
health services, it is just not perceived as a personal responsibility. Don
Cash, LTCI Specialist, Elder Care Associates, Inc., Scotch Plains, NJ ---------------- "Part of the problem with declining sales is the insurers themselves. They simply don't make a very appealing product, especially for younger buyers. By sticking to a crisis driven, reactive financing vehicle that 'waits until you're broken to keep you from going broke,' they are completely out of step with recent developments in disease management and consumer driven health care. Rather than embrace these trends, they continue to compete on price, underwriting and meaningless product features and then wonder why the brokerage community hollows out any profit potential. "This industry will continue to decline until one
or more insurers is willing to reevaluate how they approach the core
risk and help their customers reduce their LTC exposure, before the
event. Otherwise, they will proceed as they have during the
last ten years by doing the same thing over and over and expecting
different results, which is, of course, the definition of
insanity." Martin
McBirney, Actuary, Sandpoint, Idaho ---------------- "When
you keep telling people the sky is falling, pretty soon they go and buy
an umbrella. Maybe bad news
sells newspapers and that could be the reason LIMRA's reports keep
'spinning' the headlines they report toward the negative side. Or, maybe I'm just a marketer and we tend to see the sunny
side of things. If one
looks at the LIMRA underlying data ... lo and behold ... 4 insurers
reported quarterly increases of 20% or more ... 2 report increases of
10-19.9% ... and 3 report 5 to 9.9%.
How many industries are reporting 20% increases this year (GM eat
your heart out!). At the
beginning of this year's Producers Summit in Austin, I am going to ask
those whose YTD sales are ahead of the prior year to stand.
I expect most will. I
think I'm going to start marketing LTC sunscreen ... because sooner or
later someone is going to see there's a very bright and shiny sun behind
the dark clouds these folks keep talking about! "It
is true that the number of policies sold was fewer than the prior year
... but why not talk about the companies that are seeing good increases.
Many are! Some of
their data is skewed because when a company leaves the business, it's a
100% drop in sales. If they
led with 7 companies report sales gains despite overall decline in
number of policies sold ... what a different message. "I
don't think it's about the public not liking current products.
Tell me who likes their individual health insurance ... or car
insurance with high deductibles. I do think the companies are hearing the need for a different
approach because ages are dropping and you'll be seeing policies more
adapted to what younger people want.
But, I think we're entering stage 2 ... with at least 2 more
stages to come. Jesse
Slome, president of Sales Creators, publisher of Sales Strategies
magazine, and organizer of the National LTCi Producers Summits ---------------- And
what about our "LTC Comment" speculation that part of the
problem with LTCi sales might be the fact that government has given away
most professional LTC services for over 40 years?
Just one observation. "I
think that you're right-on as far as Medicaid is concerned.
Hopefully, reform will continue so that the program can be used
for the truly needy. I also
think that the insurance carriers are not doing enough to simplify the
product." Barry
J. Fisher, CSA, LTCP Vice-President & Chief Marketing Officer
Republic Marketing Group, Inc. New
Braunfels, Texas ---------------- LTC
Comment: One thing is for
sure. The state of the LTC
insurance market elicits considerable thought and passion.
For decades now, people and companies have been entering that
business with high hopes because of the promising demographics and
leaving it later discouraged and broke.
For
my part, having presented the evidence as clearly and convincingly as
I'm able, I just don't know what it will take to convince the industry
and the government of one simple truth: "You
can't sell apples on one side of the street when they're giving them
away on the other." But
they say success is 10 percent inspiration and 90 percent perspiration.
Persistence pays as this year's enactment of the Deficit
Reduction Act proves. So
let's all do all we can do. Carry
on. Steve
Moses |
