Open Options: Alternatives to Traditional LTCi

Six leading long-term care insurance (LTCi) companies recorded an increase in policy sales in 2015 compared to the previous year, according to the American Association for Long-Term Care Insurance (AALTCI).

But overall sales declined, and have for the past few years. The number of new policies sold in 2015 was down around 20%, says Jesse Slome, executive director of the AALTCI.

Why? For starters, the coverage itself has a bad rap because it’s expensive, and various medical conditions make it impossible for some to qualify. Based on these negative perceptions, many consumers rule it out.

“Traditional LTCi companies are not addressing consumers directly to overcome any negative media stories or negative online reviews,” Slome points out.

As an alternative, many independent agents have begun offering hybrid products or short-term care insurance—another reason for the downward trend in traditional LTCi sales.

“It’s absolutely suitable for some people,” Slome says. “It’s like car insurance. People can pick and choose what benefits they want and what they can afford. Too many agents of LTCi go in with a one-size-fits-all solution.”

In light of ongoing changes in the overall insurance market, the decline in traditional LTCi doesn’t surprise Slome. It’s not cause for concern, either, he says: “Hundreds of thousands of Americans are buying some form of LTCi protection.”

The AALTCI reports that LTCi companies paid $8.15 billion in claim benefits in 2015, marking a 4% increase from the year before. According to Slome, 41% of LTCi claims end in one year or less.

Whether clients opt for traditional LTCi, short-term care insurance or hybrid products that offer some long-term care benefits, agents should be the ones who bring it up—especially when clients are young, healthy and more likely to qualify.

“One of the biggest mistakes agents still make is being afraid to ask their clients if they’ve done any long-term care planning. A vast majority of consumers today initiate the process of looking into LTCi or hybrid products,” Slome notes.

Similar to all other insurance markets, Slome says, “for agents to grow and survive, they have to recognize what changes are taking place and what they need to do to satisfy current consumer desires.”

Jordan Reabold is IA assistant editor.