LTC
Why now is the Best Time to Buy…
Responding to Clients Who Want to Put Off Buying LTC Insurance
by Tom Riekse Jr., CEBS, ChFC

It’s not news that the recession has affected long-term care (LTC) sales despite the large target market of Baby Boomers who are prime candidates. But, for residents of California and other states, there has never been a better time to buy. This article discusses why your clients are delaying coverage and how to get them off the fence.

Before we look at why people are delaying, let’s identify the ideal candidates for LTC coverage. Fifty-three percent of purchasers bought coverage at ages 55 and 64. Consider approaching women who are married or in a committed relationship since 65% of claims were paid to women, but premium rates are unisex. Also, those with personal experience with LTC, such as being a caregiver for a relative, make ideal prospects. Moreover, a highly educated client who understands the fiscal problems that have arrived and won’t be counting on the government for care will be more likely to buy. Finally, business owners or those with health savings accounts love the tax advantages of long-term care insurance (LTC insurance).

Putting this all together identifies a market of 55 to 64-year old college-educated women who have some experience with long-term care. This large market used to drive a lot of sales. But, lately, people in this market have been saving cash instead of buying coverage. Let’s look at some reasons why.

They’re Waiting For The Economy To Improve.
Many working people have been hit with salary freezes, furlough days, or other uncertainty. They know they have to plan, but they don’t feel safe letting go of their money right now. A good approach is to help them see LTC insurance as part of a complete retirement plan. If they are starting to invest in the stock market again, they are ready to invest in their future LTC. Appeal to the fact that buying at younger ages can really help lower the cost versus waiting until you are older to buy – not to mention the fact that some may be uninsurable at that point.

They’re Waiting Until Their Own Financial Situation Improves.
The average annual LTC premium purchased in the first nine months of 2008 was over $2,100, according to LIMRA. That is over $4,000 for a couple. That is an expensive premium even for those who feel secure. Consider a more affordable premium that still offers excellent benefits. Remember that California residents can buy partnership plans, which provide an additional level of security if benefits are exhausted.

They’re Waiting To See What Kind of Healthcare Plans Congress Passes and How it Incorporates LTC.
Senator Edward Kennedy, Congressmen Frank Pallone and John Dingell introduced the Community Living Assistance Services and Supports (CLASS) Act of 2009 to create an insurance program for adults who become functionally disabled. Even in the unlikely event the bill does become law, it includes a five-year waiting period and benefits that would need to be supplemented by a private, underwritten LTC plan.

They’re Concerned About The Financial Health of Insurance Carriers.
Late 2008 and early 2009 was certainly a scary time for financial markets and insurers. But, the market has stabilized and the leading LTC carriers are stable and investing conservatively.

They’re Waiting For a Better Product.
New products typically have new pricing, which can be higher. California is often a couple of years behind in product approvals, giving its residents an opportunity to get a nice deal. The overwhelming reason to buy now is that you can never predict when health will change. More than half of those 50 to 59 qualify for a good health discount. Less than 14% are declined coverage in this age group. But, only 42.2% of those 60 to 69 qualify for preferred health discounts and 22.9% are declined for coverage. Health changes may also mean options are removed.
Yes, it is a challenging environment, but buying an affordable LTC plan now can pay big dividends for clients later.

(Note: All statistics, except for those from LIMRA, are from the California based American for Long-Term Care Insurance – 2009 Sourcebook. Learn more at www.aaltci.org)
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Tom Riekse Jr., CEBS, ChFC is managing principal at LTC Insurance Partners LLC, a brokerage general agency with offices in Illinois and Wisconsin specializing in Long-Term Care insurance. E-mail him at tom.rieksejr@ltcipartners.com.