Back in the 90’s, the insurance community believed that LTC insurance would be a huge windfall. Consumers were expected to heed the (true) dire warnings about future care costs, Medicaid (Medi-Cal in CA) shortcomings and poverty requirements, the depletion of estates, etc. Thousands of agents lined up to become LTCi “order-takers”, urged on by hundreds of insurance companies and marketing organizations. High commissions on most policies kept everyone interested, especially the high-pressure sales contingent.
Ultimately, however, the industry appears to have outsmarted itself.
The product, originally (unrealistically) low-priced, has become prohibitively expensive, even for younger purchasers.
Health underwriting, originally (insupportably) relaxed, is now ferociously aggressive, with numerous declines and “rate-ups” for pre-existing health issues.
Most of all, the product design seems incurably complex, challenging the average agent to explain sophisticated concepts “in simple terms” - with the inevitable result that consumers have become skeptical about both the insurance and agents purveying it.
Consumers have also witnessed numerous high-profile insurers exit the LTCi industry, and/or impose harsh premium increases on early policies, as the realities of LTC marketplace become increasingly apparent.
The “average agent” has moved on, or is simply no longer a reliable source for LTCi. Consumers should be wary of any contact regarding LTCi that does not begin with a careful, frank assessment of their needs, health eligibility, and budget. Agents should be able to discuss all factors that affect the decision, including Medicare, Medicaid/Medi-Cal, basic estate planning, care costs and options in the community, local providers, etc. Agents should not be in a hurry to close the sale, which can take weeks or months as busy consumers educate themselves on the subject.
Some agents have tried partnering with financial advisors, or even attorneys or accountants, to achieve additional legitimacy. In a perfect world, this works for the consumer, who purchases only the amount and type of coverage deemed appropriate by the whole advisory team. However, consumers who are “heartily encouraged” by any advisor to “talk to our LTCi specialist” should be very clear about any revenue-sharing arrangements or commission splits. As always, where there are high commissions to be earned, consumers should be watchful.
Honest, no-pressure answers to your LTC questions: 435-688-2637
