As we approach the second anniversary of the financial crisis, it's apparent that the ripple effect has moved well beyond housing and reached almost every aspect of the economy.
Significant areas that have been affected have been long term care planning and long term care insurance (LTCI). For example, although the major long term care carriers were able to survive the crisis, the investment returns on their insurance reserves are under pressure, which affects both in-force and new premiums.
However, that is nothing compared with the stress put on the largest long term care payer, Medicaid, as health care reform and the economy adds more and more people to the Medicaid rolls. Aging boomers mean demands will skyrocket, resulting in difficult choices of how to fund care. The Deloitte Center for Health Solutions has published a study titled "Medicaid Long-Term Care: The Ticking Time Bomb," which explains the issues involved. In addition, many view the CLASS Act, a new voluntary government long term care plan, with skepticism.
What is a potential LTCI buyer to do if they're averse to risk? We know that consumers have dramatically changed their behavior in the last couple of years. They have soured on the promise of stock market returns, have been sitting on cash, and are seeking to protect what they have.
With this continued uncertainty, how do insurance advisors best coach their clients on the least risky way to plan for LTC?
Here are some tips that may help.
1. Explore guaranteed premium insurance options
