LTC Bullet: When Should You Buy LTCI and Why?

Tuesday, December 16, 2003


LTC Comment: What better time than the Holidays to think about the future well-being of ourselves, our families, our friends and, well, everyone? Today we feature three items on long-term care insurance. After the ***news.***

*** We have a limited number of hard copies available of the Center for Long-Term Care Financing's new report, titled "The Heartland Model for Long-Term Care Reform: A Case Study in Nebraska." While supplies last, we'll be glad to mail one to anyone and everyone who makes a new tax-deductible contribution to the Center of $250 or more. Just write "Send the Heartland report" on your check and mail it to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, Washington 98109. You can read a summary of the report at or find the whole report at . If you'd be willing to help us distribute the report to your local media, legislators, and policy makers, just ask to email you a .pdf file of "The Heartland Model for Long-Term Care Reform: A Case Study in Nebraska." He'll send it to you ASAP and you can then forward as many copies as you'd like to people with influence on LTC public policy. We believe other states will want the Center's technical assistance when they see how we advised Nebraska to save 20 percent of its Medicaid nursing home budget by encouraging private financing of long-term care. ***


The Center for Long-Term Care Financing will sponsor, with the Long Term Care Section of the Society of Actuaries, the 4th Annual Intercompany Long Term Care Insurance Conference. A quote from Center President, Steve Moses, summarizes his viewpoint from the last conference: "One of the SOA conference's strong points is that it brings together actuaries, underwriters, and marketing people in an environment that encourages them to understand each other's often conflicting points of view." For a more detailed review of last year's SOA-LTCI conference, see the Center's "virtual visit" at (Donor Zone access required; see below for how to qualify.)

According to its organizers, conference sessions will cover the intricacies of the long term care insurance business from the perspective of the home office and the field. Public policy experts will also provide insight into the future of LTCI. Expected to attract about 800 participants, the upcoming conference will feature over 60 educational breakouts. Two new tracks are in the program - LTCI Operations/Information Technology and Group LTCI. The full program has tracks for Actuarial, Claims, Compliance, Management, Marketing, and Underwriting as well. In addition, each of the LTCI certification programs will be invited back to hold their certification courses either immediately before or after the conference. Networking possibilities abound at break times as well as during the breakfast and lunch breaks in the Exhibit Hall. The two conference receptions also provide a relaxed atmosphere to meet with colleagues and peers. Representatives of more than 100 of the top LTCI field marketing groups attended the 2003 conference, with many more expected to attend in 2004.

Registrants who enroll through the Center's sponsorship receive a discounted registration fee. There is also an additional discount for Early Bird registration before January 7, 2004. For registration and more information on this conference, visit the conference website at . ***

*** LATEST DONOR-ONLY ZONE CONTENT: Here's the latest Zone content followed by instructions on how to subscribe so you can receive these critical epistles daily by email.

The LTC Reader #3-050--Kiplinger's Advises Be Wary of Medicaid Planning (Beware Medicaid's access and quality problems and prepare to pay privately instead.)

The LTC Data Update #3-032--Nursing Homes Rebut GAO on Medicaid Rates (Nursing home lobby lodges "scathing" response to General Accounting Office findings.)

The LTC Reader #3-051--How Do You Want to Go Out? (When the time comes, will you or your heirs scrimp on LTC or will you be ready for the best with LTCI?)

Don't miss our "virtual visits" to major LTC industry conferences in The Zone. You'll find our comparison of the conferences, session summaries, interviews and pictures at .

Individual donors of $150 or more and corporate donors to the Center for Long-Term Care Financing receive our daily email LTC Bullets, LTC E-Alerts, LTC Readers, and LTC Data Updates for a full year. You'll also get access to the donor-only zone where these publications are archived along with other donor-only features. If you already qualify for The Zone, you can click the following link, enter your user name and password, and go directly to the latest donor zone content and archives: . If you do not already qualify for The Zone, mail your tax-deductible contribution of $150 or more to the Center for Long-Term Care Financing, 2212 Queen Anne Avenue North, #110, Seattle, WA 98109. Then email your preferred user name and password (up to 10 characters each). You can also contribute online by credit card or direct withdrawal at . ***


LTC Comment: Eileen Tell, of The Long Term Care Group, has written a series of "reality check" articles for LTC Bullets. We usually call her in to correct the record when the major media gets the facts or advice about long-term care planning wrong. Below, Ms. Tell tackles one of the tough questions that often inhibit consumers from getting long-term care protection until it's too late.

Romeo Raabe is an LTCI agent, trainer and author associated with JSA, a brokerage of LTCI in Green Bay, WI. Mr. Raabe puts an edge on the issue of when to purchase LTCI by showing that many consumer complaints about the product come from waiting too long to buy it. Evidently, when it comes to LTCI, people just don't get the concept that "You can't buy fire insurance when your house is already in flames."

Finally, Philip Gallant, VP of New York Long Term Care Insurance Brokers, Ltd., addresses the issue of what happens to people if they don't buy LTCI in an excerpt from his BrokerWorld critique of Consumer Reports' November 2003 broadside at long-term care insurance.


What's the "Best" Time to Buy Long Term Care Insurance (LTCI)?
Eileen J. Tell

Long Term Care Group, Inc.

There is no "one size fits all" answer. Buying LTCI is about buying "peace of mind," and that means different things to different people and takes on new meaning at various life stages. In general, younger is better, since premiums are based on your age when you buy. If you buy at a younger age (e.g., 45 vs. 55), you can save substantially over your lifetime, even considering the longer period of time over which you might be paying premiums.

Consider the following example comparing the total premiums paid up to age 80 for someone buying coverage at age 45, 55 and 65. (This example assumes that benefits begin at age 80 and, thus, premium payments are no longer required at that time since most insurers waive premiums when benefits begin.) For this illustration, we use the premium rates for the Federal LTC Program and assume that the individual is buying a 5-year pool of benefits, a 90 day waiting period, and 5% compound automatic annual inflation protection. We also assume that they purchase the equivalent daily benefit to $100/day. Thus, if coverage is purchased today at age 45, the daily benefit amount obtained is $100/day. If the purchase is delayed until 10 years from now, at age 55, this same individual would need to purchase a daily benefit of $163 in order to purchase equivalent coverage relative to the costs of care in 10 years.

Purchase Age

Monthly Premium

Total Premiums Paid by Age 80

Amount Saved if Purchase at Age 45













The higher cost per $100 of benefit, combined with the fact that, the longer you wait, the more benefit you must buy to keep pace with rising nursing home costs, explains why it is important to buy at younger ages.

Also, if you wait too long, an injury or illness or other change in your health could make you uninsurable. While a LTC condition is less likely at a younger age - say in your 40's, 50's and 60's - if it does occur due to an accident, stroke, cancer, or other disabling condition that strikes at younger ages, the financial and emotional consequences can be even more devastating. Imagine trying to cope with the expenses of a seriously disabling condition like a stroke while also trying to raise a family or send your child to college. At younger ages, LTCI provides income support and protection for you and your family; if you don't need care until you are older, the coverage can serve more to preserve assets and quality of life for you and your loved ones.

Today, people buy LTCI at all ages. In the employer-sponsored market, the average buyer is age 50, with 25% of buyers under age 45! In the individual market, the average age at which people buy is older, age 67, but still it is getting younger every year as more people realize the importance of this type of coverage and the financial advantage of buying younger. And today, one-third of all buyers are under age 65.

Today's policies are also much more flexible to accommodate a changing LTC service delivery landscape, so buying young doesn't mean getting stuck with a product that does not keep up with innovation and change.

Our advice is generally to start thinking about LTCI in your 40's. If your employer offers a group policy that was developed or updated recently (and thus is likely to include the most contemporary coverage), buy it now. You'll save premium costs in the long run and have the best chance of being insurable. If you don't have coverage at work, then start to explore other options and give serious thought to what it means to have coverage. If it takes a while to get moving, that's okay. But don't put it off until you are close to retirement; by then, you'll be overwhelmed with other retirement planning concerns and risk facing a higher premium or, worse, being uninsurable.


Excerpt from a letter to the editor of National Underwriter
Romeo Raabe, LUTCF, LTCP

" . . . I went through 2 years worth of complaints on LTC products. . . . The majority were people who were unhappy that they were rated due to diabetes, strokes, asthma, arthritis and other ailments that a knowledgeable producer would expect a rating or declination for. I wondered at the time why so many people would complain about this when relatively few complain to the insurance commissioner about paying extra for car insurance due to a few DWI's.

"I concluded that the reason is related to articles like the one in the current Consumer's Report magazine (November 2003). They state that a person should not consider buying LTCI until age 65 unless they have a chronic condition. Due to abundant articles about LTCI with often confusing and contradictory claims, the public has come to the conclusion that it's best not to buy LTCI until it is needed. That would be the only reason why so many people would complain to the insurance commissioner that their rating or denial of coverage is 'unfair.' Somehow we have anesthetized the public to the risk and led them to believe this coverage is readily available 'when they need it.' Your publication could do a great service by publicizing the fact that LTCI can only be underwritten and issued when prospects apply while healthy. . . .

"When the public understands that just like car insurance must be purchased before the accident, LTCI must be obtained while insurable, maybe the complaints will subside, agents will be forced through competition to be better trained, and we can appreciate LTCI as a risk management tool to pay bills we cannot, not something to buy at the last minute and then complain when we can't get preferred ratings."


Excerpt from Philip C. Gallant, "When Planning for Long Term Care: Do You Need Consumer Reports?," Broker World, Vol. 23, No. 12, December 2003, pps. 38-44.

"The [Consumer Reports] article then advises consumers to order Weiss Ratings Shoppers Guide for LTCI at a cost of $45. They don't even mention that the National Association of Insurance Commissioners offers a shoppers guide for free. . . .

"Although Weiss' guide has [some] good pieces of advice, Stephen Moses points out correctly that Weiss is way off base when it comes to the need for private LTCI. Weiss states that Medicaid is an option for people and should be considered as an alternative to LTCI.

"Says Moses, 'If you rely on Medicaid instead, you may become trapped in an underfinanced nursing home, reliant on a welfare program that is approaching bankruptcy, and vulnerable to benefit recovery from your estate in the long run anyway.' Weiss even says 'Going on Medicaid, however, is not something we recommend if you can avoid it. In general, it's not a good idea to deplete all your assets, and the quality of care you would receive through Medicaid is questionable.'" (pps. 40, 44)