Hot (or Not): The Year in LTCI

 Agents Struggle to Reach the Rest of the Market

Despite all of the turmoil at the companies issuing long-term care insurance (LTCI) policies, it looks as if 2011 LTCI sales were pretty solid.

The question is how to reach more baby boomers while they are still young enough and healthy enough to qualify for affordable coverage.

Here is a look at 5 trends that shaped the market last year and could continue to shape it over the next 12 months.

1. The buyers are still there.

Jesse Slome, executive director of the American Association for Long Term Care Association (AALTCI), Westlake Village, Calif., says his projections suggest that the number new LTCI policies sold in 2011 was higher than in 2010, and that premium revenue from new LTCI sales was also up.

Carriers sold about 500,000 new LTCI policies in 2011, and federal employees alone bought about 45,000 LTCI policies through a voluntary LTCI program. Slome says those results suggest growing public awareness of LTCI’s problem-solving capabilities.

“This is a market driven by growing interest among consumers, not by advisors or agents seeking to solve problems for clients,” according to Scott Boyd, a vice president at the National Benefit Corp., West Des Moines, Iowa.

2. Many of the buyers continue to come from a relatively small demographic.

Although LTCI sales may be up, overall LTCI market penetration within the 45-70 age group remains static at about 10%, Boyd says.

“This is still a discretionary product, no matter how passionately some agents believe it’s a product everyone should have,” Slome says.

Slome says the most successful LTCI salespeople are those who know the core market is people in the 52-64 age bracket.

3. The Web is helping.

The days of older consumers shunning computers are gone.

Slome credits the Internet with giving people a way to search for information about long-term care (LTC) planning  solutions. He notes that that visits to the AALTCI website have increased sharply in the past two years, to about 30,000 a month. “Google has changed the way consumers look at, and look for, [LTCI] protection,” Slome says.

4. LTCI Product features are evolving gradually.

Rather than reinventing the LTCI wheel, insurers are making incremental improvements to their products. Slome sees shared-care options, which let two spouses share a single pot of coverage, growing in popularity.

5. Agents are going beyond the list of traditional LTCI products to help clients with LTC planning.

One of the bright spots in the market has been sales of life insurance that comes with optional asset-based LTCI protection.

“Long term care is a universal problem facing all aging Americans, but long-term care insurance is not the universal solution to that problem,” Slome says.

Sales premiums for life-LTC hybrid products, which are also called linked products, increased about 79% in 2010 and also seem to have grown in 2011, according to AALTCI. More than half of the hybrid products were bought by consumers ages 65 and older, the association says.

Because of the high premiums involved, life-LTC hybrid policies are likely to remain a niche product, according to Slome.

But “financial planners and investment professionals who may not like the more complex nature of traditional long-term care insurance policies find them easier to sell,” Slome says.

By David Port for


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