LTC Bullet:  LTCi Update

Thursday, October 13, 2005 

Washington, DC-- 

LTC Comment:  LIMRA International's second quarter 2005 findings regarding the long-term care insurance market show continuing declines with notable exceptions.  More after the ***news.*** 

*** ANNUITIZE FOR LTC?  On September 27, Congresswoman Stephanie Tubbs Jones (D-OH) joined Ways and Means colleague Nancy L. Johnson (R-CT) in introducing the Flexible Retirement Savings Act of 2005.  This legislation will address the critical issues of long-term care and retirement savings.  Specifically, it creates a tax incentive for people to annuitize a portion of their savings as a way to protect against longevity or outliving their savings.  In addition, it breaks down artificial walls that discourage people from coupling a life insurance policy or an annuity with a long-term care policy.  For more details, go to: *** 

*** LTC EMBED MINI-REPORT:  Yesterday, I met with Mark Warshawsky, Assistant Secretary for Economic Policy at the Treasury Department.  Dr. Warshawsky has long been an advocate for the broader use of annuities in retirement and long-term care planning.  We had a long conversation about the crowd-out effect of easy Medicaid LTC eligibility on all forms of private long-term care financing, including annuities, traditional LTCi and reverse mortgages.  Today, I will meet with a staffer for Congresswoman Nancy Johnson to drive home the same point:  "You can't sell apples on one side of the street when they're giving them away on the other."  Stanching the hemorrhage in Medicaid eligibility along lines currently under consideration in the House Energy and Commerce Committee, where former Center for Long-Term Care Financing Executive Director David Rosenfeld continues to do yeoman's service, is a critical prerequisite to unleash the potential of private financing alternatives, to relieve the fiscal burden on Medicaid and to improve that program's ability to serve the poor.*** 

*** DO YOU LIKE THE LTC BULLETS?  If so, please help us to keep them coming to you AND get even more inside information from the Center.  Join for $150 per year or $12.50 per month and you will also receive our daily LTC E-Alerts and access to the Center's "Members Only" website zone.  Contact Damon at 206-283-7036 or for details.  Or simply sign up at  We want you.  We need you.  We love you, if you're on the side of rational long-term care policy reform. *** 



LTC Comment:  LIMRA International is an insurance industry association that provides, according to its website, "cooperative research and value-added marketing and distribution expertise." 

An executive summary of LIMRA's second quarter 2005 report on the individual LTC insurance market can be found at

Following below are some highlights.  Bottom line though, most of the long-term care insurance market continues to struggle.  Sales are down compared to the first six months of 2004.  Despite some hopeful signs, the overall picture remains bleak. 

Is there really any wonder that LTC insurance sales languish when the availability of Medicaid nursing home benefits obviates two-thirds of the potential LTCi market?  See "Supply or Demand:  Why is the Market for Long-Term Care Insurance So Small?," by Jeffrey R. Brown and Amy Finkelstein, National Bureau of Economic Research, 2004,  

LTCi carriers and their trade associations should be focused like a laser on changing public policy to target Medicaid to the needy thereby creating savings that can fund tax incentives for private LTCi.  But they aren't.  The industry continues to importune Congress and the Bush Administration for expensive tax incentives without proposing a way to pay for them.  That's a losing strategy in times of fiscal duress like now. 

A wonderful opportunity is being missed.  Save Medicaid for the poor by preventing overutilization of the welfare program by the middle class and affluent.  Use the savings to educate and incentivize the non-poor to buy LTC insurance or use their home equity for long-term care.  Unless and until the LTC insurance and provider industries embrace such an approach, LTCi sales will continue to disappoint and long-term care providers will remain starved for revenue. 


Following are excerpts (footnotes and tables omitted) from LIMRA International, "Individual LTC Insurance:  Executive Summary, Second Quarter 2005, Industry Highlights,  

"Over 170,000 individuals purchased long-term care insurance (LTCI) during the first six months of 2005, 10 percent fewer than had purchased the coverage during the first half of 2004.  Based on new premium, individual LTCI sales declined 8 percent.  However, the rate of decline lessened significantly during April, May, and June.  Following first quarter's 15 percent plunge, new premium for second quarter 2005 alone declined just 1 percent compared to the same three-month period in 2004.  Nonetheless, these comparisons are being made to a year that marked the greatest decline in sales since LIMRA began tracking LTCI sales in 1988." 

"Ninety-seven percent of both individual LTCI policies sold and the corresponding new premium in the first half of 2005 are tax-qualified plans.  New premium for this preferred product was down 6 percent, compared to the first six months of 2004. 

"Nine participating carriers sold non-qualified products during the six-month period.  All nine of these insurers experienced decreases in the sale of non-qualified LTCI plans, ranging from a 16 percent decline for one carrier to a 60 percent decline for another.  The total new premium for these plans plunged 36 percent." 

"Carriers varied in what their average buyer is paying for their coverage in year one, ranging from $828 per insured for one carrier to nearly $3,200 for another.  On average, individual LTCI buyers from the first half of 2005 are paying $1,966 during their policies' first year, 2 percent more than buyers from the same period last year." 

"Lifetime premium payment methods accounted for 94 percent of individual LTCI policies sold and 87 percent of new premium in the first half of 2005.  Lifetime premium payment methods include annual, semi-annual, quarterly, and monthly premium payment modes.  Buyers of these products are paying $1,833 per year on average. 

"Fifteen carriers sold 10-pay products during the first six months of the year.  Ten-pay products accounted for 4 percent of new policies and 10 percent of new premium.  Averaging $4,532 per insured, carriers' 10-pay products ranged from $1,473 on average for one insurer to $6,172 for another insurer's average 10-pay buyer." 

"The top five individual LTCI carriers accounted for a combined market share of 69 percent, an increase of 3 percentage points compared to leaders in the first six months of 2004.  The top 10 writers accounted for 85 percent of annualized new premiums, also up 3 percentage points over the same period last year." 

Top LTCi Writers based on new premiums (alphabetically listed)
2nd quarter 2005 YTD  

Allianz Life
Bankers Life and Casualty Allianz Life
Genworth Financial
John Hancock
Lincoln Benefit Life
Massachusetts Mutual
New York Life
Northwestern LTC