When considering the up-and-down nature of long term care insurance, 2010 stood out as a significant year, both on the carrier and the regulatory side. The three biggest stories of 2010 were:
- Passage of the CLASS Act, the government's new voluntary long term care program, as part of the health care reform package
- Carriers suspending new business sales or increasing in-force premiums
- Pension Protection Act (PPA) rules becoming effective on Jan. 1, 2010, which increased the attractiveness of linked-product offerings
How can you benefit in 2011 from the big news of 2010? Here are some ideas.
1. Educate clients and prospects on the CLASS Act
The CLASS Act, the government-run voluntary LTC plan is law, and technically effective Jan. 1, 2011. An easy way to think of the CLASS Act is that it is the public option for LTCI; many people remember the discussion of a public option for health insurance during the health debates.
Since we won't know the program's premiums until October 2012, people may be tempted to wait until then to compare CLASS to private coverage. This ignores the fact that the CLASS plan has a five-year wait period, and therefore puts people at great exposure. Those securing private coverage now will have immediate protection.
Also, since CLASS will be administered by payroll deduction, group clients will have a decision to make as well–do they participate in CLASS or not? They will be looking for guidance, and advisors can be there for them.
2. Expand your carrier portfolio and learn about new plans
Although it is true that some carriers have either suspended new business sales or repriced their products, other companies have stepped into the market to fill the void. Now is a good time to re-evaluate the types of product features and benefits that you have become accustomed to recommending. Insurers are continuing to innovate and learn more about LTC underwriting and pricing. Instead of spreadsheeting first-year premiums, try to compare companies based on field underwriting and benefits.
3. Instead of asking for a check, consider a reallocation of assets
Even though the economy is slowly climbing out of the recession, consumers may still be hesitant to take on new expense items, such as annual LTCI premiums. However, for many, there is a way to reallocate current assets and create a long term care plan. Single premium life/LTC and annuity/LTC plans, now offered by more carriers, give people that opportunity. And with the Pension Protection Act allowing 1035 exchange opportunities, now is the time to discuss that option.
