Top LTC Execs Speak Out On Industry Concerns

MetLife is also pondering possible adjustments to its compensation formula Acselrod said. Low lapse rates for LTC insurance mean a long renewal stream of income, he observed. "Perhaps we need to look at moving some of that compensation into the first year," he said.

He cautioned, however, "there's a limit as to how much you can push into the first year, without causing inappropriate behavior" [in sales tactics].

Moore, too, said Hancock is thinking of ways to get more incentives to producers so that they think of LTC insurance "as a great way to make a living."

Legislation. The executives examined 2 pieces of legislation of great interest to the industry: one that would allow individuals to pay for LTC insurance from their 401(k) retirement plan assets, without penalty; and the other a proposal to eliminate the Section 125 exclusion of LTC insurance from above-the-line tax deductions for employee benefits.

Making 401(k) funds available to pay for LTC insurance received an unenthusiastic reception from most on the panel.

"The line of individuals who want to crack open 401(k)s goes from here to Abilene," said Stinson.

"I'd have a lot of concern about that money coming out of 401(k)s," Mako said.

Moore said 401(k)s were intended to provide an income basis for retirement. "I like the idea of keeping it separate from protection," she said.

Bagshaw, however, was "willing to gamble at little more." He said it would be "good for people, good for America" if 401(k) withdrawals were allowed for LTC. "I want a crack at that big bank," he said.

On the Section 125 proposal, Moore was confident. "This will be the year long term care will be included" [in section 125], she declared. If so, it would give a boost to worksite sales of the product, she said.

Stinson wasn't so sure. "I'd love to have an above-the line tax deduction, but it will be a tough battle," he said. Acselrod said he also thought the proposal "is not likely to happen."

Worries. Acselrod said his big concern was persistency. As long as his company had "the right business on the books," however, the risk appears acceptable, he said.

Bagshaw's response: "Don't worry about lapse rates. They can't go down any further." More worrisome to Bagshaw was whether interest rates on invested assets could go lower, possibly affecting premium rates.

Stinson saw consumer apathy continuing as the biggest issue facing LTC. "I see big progress if we can get around that," he said.

Alzheimer's disease is another concern for Stinson. "Half of our claims are for Alzheimer's," he said. One cause for hope: top medical researchers recently claimed they've moved forward in treating the disease. "It's exciting," he said.

Hybrid products. Stinson predicted LTC insurance increasingly would be placed inside other products.

Moore said Hancock has looked at tying LTC to annuities because of new tax advantages under the PPA, but added, "We have concerns about adding complexities to an already complicated product," she said.

Mako, too, was hesitant. "We have enough challenges getting customers to understand long term care," he said.

Acselrod said there were opportunities for other products with imbedded LTC provisions, "but we're not moving in that direction very quickly."

Bagshaw, however, predicted such products would grow. "Due to the PPA, we will need to sell [annuities with LTC provisions] as a secure income stream that's protected," he said. "There's going to be a need to hook up income for life with other financial products. The risks of retirement are scary. There has to be movement in that direction."