Probably no insurance product has gone through more changes and variations than long-term care insurance (LTCI).
Where once clients would routinely buy lifetime coverage with a 5 percent compound cost of living adjustment (COLA) rider and limited-pay policies were all the rage, today the landscape has changed.
Most policies sold have a benefit period of three to five years and the 5 percent compound COLA rider is all but extinct. Limited-pay policies are history. Rates have gone up, many carriers have exited the market, and those that remain have tightened up on underwriting so hard many agents just gave up trying to write LTCI.
But all is not doom and gloom, if you have the right tools in your briefcase.
Even though traditional LTCI is getting tougher to sell, there are products entering the marketplace that can provide coverage for your client. These policies can cost much less than traditional LTCI and can be issued without all the underwriting hoops.
See also: EBRI: Real LTC spending
In fact, with so many products available you shouldn't have to walk away from any meeting without an application.
Let's take a look.
Traditional LTCI
This is still the cornerstone of the industry. However with carriers leaving, increasing rates, strict underwriting standards, long underwriting times and special continuing education requirements, many agents shy away from it.
Because of these trends, the average age of the insureds is getting lower, and the policies are smaller. Also, with the trend towards gender-based pricing, many people who could have been clients just five to 10 years ago are finding themselves priced out of being able to afford a policy.
Hybrid LTC
These products are a combination life insurance and long-term care (LTC) benefits or annuities and LTC benefits. They're perfect for the client who says, "What if I pay into this policy for all those years and never use it?" Unless your client has figured out a way to live forever, someone, somewhere is guaranteed to get a benefit of some sort.
