Easy Answers

We are all of course guilty of succumbing to the temptation of embracing easy answers. However, sometimes it seems our own profession may have a particular affinity for simplification excess.

This is evidenced by a statement I heard recently from the committee examining the wide, and growing world of Combo Products. “Hybrid, Linked and Combo products are the fastest growing segment of both life and long term care insurance.” When you add asset based long term care sales we have a several billion dollar industry with stand- alone LTCI sales accounting for only about $500 million. The interesting question is how much of the current life production is written with some form of chronic illness benefit? The current “guess” is approximately one third. This number will continue to grow as more companies move aggressively to provide some form of living benefit.

These riders are being produced across a very wide spectrum of quality and intent. I am concerned that many may not clearly understand what was sold or in some cases automatically included in their life policy. I am also concerned that consumers may not clearly understand what they bought..

Any leveraging of risk is of course preferable to ignoring the problem. It is also very helpful that we have so many more choices.

Here are a few of the questions that come to mind:

• How can you sell any version of Long Term Care protection and not be trained or certified to have that conversation?
• If you offer a benefit do you not have a responsibility to at least offer the lowest net cost to pay for the risk?
• Did you evaluate 1035 opportunities before recommending any particular new coverage?
• Did you clearly explain the difference between LTC ‘health’ riders and LTC ‘life’ riders?
• Where do you place Long Term Care ‘Planning’. Is this a Health or Estate or Asset Management planning process or some mystical combination of all the above?

The ability to conveniently address more than one need for protection with one sale has always been attractive. The current popularity of this approach as it relates to LTCI however requires an understanding that the temptation of easy answers must be resisted. There is no one right answer, each situation is unique. Begin as usual with a careful review of what is already in place. What could be exchanged at what cost? How best do you enhance LTC protection and what is the net cost of those recommended options? We have not found a new, easy answer or an easy way of avoiding a more comprehensive conversation about all the insurance options. The truth is complicated and requires training in all the available solutions. The best answer may actually require a little of this and a little of that. Learn to Mix and Match with confidence and enthusiasm A frank and open analysis of all the good and all the bad of all the choices is best. Companies, agents and consumers need to abandon the quest for that “Easy” red button. Other than that I have no opinion on the subject.