The changes keep coming

Additionally, many of the insurers that left the industry decided that DI insurance really wasn't part of their core marketplace and ultimately elected to return to their strengths.  The result was a reduced but committed group of insurers that still believed in the fundamental value of the product and elected to stay in the marketplace. 

Yes, some things changed. Underwriting rules tightened up quite a bit, and product features and definitions were amended and often made less liberal than before. And a number of mergers took place. But, amazingly, many of those same carriers that stayed on selling DI then are still in it and doing fine.

Just about everything that happened in the DI marketplace has happened to LTC insurance. The major difference is the interest rate environment. Eventually, the LTC industry will stabilize, interest rates will go up, and products will reflect the times. When this all happens is anyone's guess, and it's not good to get into the prediction game. 

So how do insurance agents continue to serve their clients appropriately? It helps to reflect on the concept that perhaps many policies bought in the past were far more comprehensive and benefit rich than most policyholders might ever need.

A surprising number of claims don't go beyond three years, so those old lifetime benefit period policies were probably overkill. Additionally, home care agencies and assisted living facilities have matured so much in the care industry that they are adequately addressing the great majority of care needs today. 

Consider these ideas:

• It may not be necessary for many consumers to buy LTC policies to cover the cost of nursing homes but rather focus their policy designs to cover home care needs and perhaps assisted living costs wherever they are incurred. Self insurance for the difference is an option.
•  Re-think the inflation option your clients might purchase with their policies. Look at lower compound rates or other inflation rider variations. At most carriers, the old standard 5% compound inflation rider has become exorbitantly expensive.
•  Consider a number of new inflation riders that now include lower compound rates such as 3% or 4%, CPI-based compound riders. Or, a new rider just launched by one carrier that is based on insurance company performance compared to a benchmark. The better the performance over the benchmark, the more the LTC benefit might go up.
•  Lastly, remember to focus on core coverage benefits like daily or monthly benefit amounts and benefit periods. What has become obvious is that the multitude of riders, in most cases, are more than people need. It's okay for many clients to consider planning to co-insure or contribute toward some of the costs they might face. 

At the end of the day, you have to remember that long-term care insurance still fills a very valuable need for clients who can't or don't want to risk all of their assets to pay for care themselves and who don't want to pass on the caregiving burden to their families.

Also see:

• Longevity and a Long-Term Health Event: The X Factors in Retirement
• Your Uninsurable Long-Term Care Insurance Client
• Long-Term Care Insurance as an Asset