LTC Bullet:  LTCi Contradictions Resolved? 

Thursday, June 15, 2006 


LTC Comment:  Last week we cited depressing statistics from LIMRA beside a rosy scenario from Claritas and asked who's right and why.  Readers respond after the ***news.*** 

*** TODAY'S LTC BULLET IS SPONSORED BY OAK STREET FUNDING.  Oak Street Funding meets the unique borrowing needs of insurance agency owners to secure affordable financing without selling their books of business.  By lending against policy renewal commissions, Oak Street Funding provides the liquidity owners need to pay off debt, hire additional staff or invest in serious marketing initiatives to propel continued growth.  For details, check out and contact Curt Vahle, Field Sales Manager, at 317-428-3806 or  We thank Mr. Vahle and Oak Street Funding for sponsoring today's LTC Bullet and for supporting the Center for Long-Term Care Reform.  To sponsor a Bullet yourself, please contact or 206-283-7036. *** 

*** STEVE MOSES says "I need to be in the Southwest U.S. August 21 or 22.  Schedule a program for one of those days anywhere between Denver, Houston, and Los Angeles, and I'll do the "Brave New World of LTC" or the educational/motivational program of your choice for your group at a deep discount:  $1,000 plus travel expenses instead of the usual $5,000 flat fee.  And, we'll throw in a one-year corporate membership to the Center as well."  Contact me directly at or 206-283-7036. ***   

*** TWO STEPS BACKWARD, ONE FORWARD.  U.S. courts tend toward giving Medicaid benefits generously and severely restricting estate recovery.  Here are two more examples followed by one that goes the other way.  "ElderLaw Answers" reports that the "Illinois High Court Rules State Cannot Recover From Surviving Spouse's Estate" ( and "High Court Rules States May Place Lien Only on Medical Portion of Settlement" ( but "Use of Revocable Trusts May Void Homestead Protection" ( *** 

*** JOHN WANE AND LENNY ANDERSON, both strong supporters of the Center for Long-Term Care Reform and prolific authors, published "Lessons Learned from Two Decades Working the LTC Marketplace," in Insurance Newsnet at  John Wane is president of American Independent Marketing in Yakima, WA.  Lenny Anderson is president of GoldenCare USA based in Plymouth, MN. *** 



LTC Comment:  According to LIMRA:  "Following three years of decline, the sale of individual long-term care insurance (LTCI) has yet to show signs of recovery.  . . . [I]ndividual LTCI sales continued its downward trend during first quarter 2006, declining 10 percent based on annualized new premium.  Over 72,000 individuals purchased LTCI during the three-month period . . ., 14 percent fewer than had purchased the coverage during the same period in 2005." 

But Claritas says:  "As the Baby Boomer generation continues its grinding march toward senior citizenship, sales of insurance products associated with aging, such as long term care (LTC) insurance, are also keeping pace . . . [W]ithin the next five years the number of U.S. households that own LTC insurance will increase from 16.5 percent to nearly 18 percent, and in the Washington, D.C. Designated Market Area (DMA), which is projected to be the most active market during this time, the number goes even higher - to 21 percent." 

We asked last week:  "Is there any way to reconcile the LIMRA findings with the Claritas projections?  How do you account for the low and seemingly ever-declining sales of long-term care insurance?  Comments are welcome.  Just click 'reply,' and fire away.  We'll compile and report the best observations we receive." 

Here's what some readers said: 

"RE:  contradictions, consider your sources.  After 35 years in the industry, I recognize and trust LIMRA research.  Who is Claritas?!  A quick Google and the 'about Claritas' tab says they're 35 years old and are essentially a Business to Business MARKETING outfit.  I believe I'll believe and trust LIMRA's spin over Claritas' any day." 

Bob Cleaveland, CLU, ChFC, LTCIS, CSA(r), Cornerstone Financial Strategies LLC, University Place, WA 


"People ARE buying more easily in the individual market due to their parents' problems without LTCi and their experience when the parents DID have coverage.  It is much easier than 3 years ago -- people just want the price and benefits like they buy a car they needed.  I think the disparity is in the measurement.  I think a lot of folks get it as a group plan now versus before when most sales were of individual policies to individuals.  

"'[T]he sale of individual long-term care insurance (LTCI)...' is apparently what was down 10%.  How much were group plans UP from a year or two ago?  MetLife says a lot!  More group plans mean consumers are getting educated, many get it without questions through work, and some shop the market once they hear about it at work and in the media.  The press seems much more positive as well now.  AARP just ran an article by Jane Bryant Quinn [] that put it on everybody's shopping list to do 5 years before retirement.  Now that's progress!" 

Barbara Hanson, CSA, LTCi Producer and former LTC provider, Felton, CA 


"Reasons for declining sales of LTC.  My observations during 15 years of LTC sales. 

1)  The market for the product is younger.  Age 50-65 is the prime market.  It was much older only 10 years ago.  These people do not see the urgency.  They are not conditioned to think about the issue.  A person age 70 sees the need more clearly.  However, with underwriting being more strict and premiums being higher, many have fallen out of the market. 

2)  People act on auto-pilot.  They are in the habit/pattern of insuring for health, property and casualty, but not for LTC.  Although regarding health coverage, since most of that is employer provided, many are in the dark about the true cost of that product as well. 

3) People think that the risk is maybe, sometime in the distant future.  People who are 55 today still think that they are 40.  In their minds, they fiercely resist the concept of aging.   

4) The broad reality is that many people have been conditioned not to think that their own health care is their responsibility.  With almost any other product or service, we expect to pay for it ourselves.  However, with health services, it is just not perceived as a personal responsibility. 

Don Cash, LTCI Specialist, Elder Care Associates, Inc., Scotch Plains, NJ 


"Part of the problem with declining sales is the insurers themselves.  They simply don't make a very appealing product, especially for younger buyers.  By sticking to a crisis driven, reactive financing vehicle that 'waits until you're broken to keep you from going broke,' they are completely out of step with recent developments in disease management and consumer driven health care.  Rather than embrace these trends, they continue to compete on price, underwriting and meaningless product features and then wonder why the brokerage community hollows out any profit potential. 

"This industry will continue to decline until one or more insurers is willing to reevaluate how they approach the core risk and help their customers reduce their LTC exposure, before the event.  Otherwise, they will proceed as they have during the last ten years by doing the same thing over and over and expecting different results, which is, of course, the definition of insanity." 

Martin McBirney, Actuary, Sandpoint, Idaho 


"When you keep telling people the sky is falling, pretty soon they go and buy an umbrella.  Maybe bad news sells newspapers and that could be the reason LIMRA's reports keep 'spinning' the headlines they report toward the negative side.  Or, maybe I'm just a marketer and we tend to see the sunny side of things.  If one looks at the LIMRA underlying data ... lo and behold ... 4 insurers reported quarterly increases of 20% or more ... 2 report increases of 10-19.9% ... and 3 report 5 to 9.9%.  How many industries are reporting 20% increases this year (GM eat your heart out!).  At the beginning of this year's Producers Summit in Austin, I am going to ask those whose YTD sales are ahead of the prior year to stand.  I expect most will.   I think I'm going to start marketing LTC sunscreen ... because sooner or later someone is going to see there's a very bright and shiny sun behind the dark clouds these folks keep talking about! 

"It is true that the number of policies sold was fewer than the prior year ... but why not talk about the companies that are seeing good increases.  Many are!  Some of their data is skewed because when a company leaves the business, it's a 100% drop in sales.  If they led with 7 companies report sales gains despite overall decline in number of policies sold ... what a different message. 

"I don't think it's about the public not liking current products.  Tell me who likes their individual health insurance ... or car insurance with high deductibles.  I do think the companies are hearing the need for a different approach because ages are dropping and you'll be seeing policies more adapted to what younger people want.  But, I think we're entering stage 2 ... with at least 2 more stages to come. 

Jesse Slome, president of Sales Creators, publisher of Sales Strategies magazine, and organizer of the National LTCi Producers Summits 


And what about our "LTC Comment" speculation that part of the problem with LTCi sales might be the fact that government has given away most professional LTC services for over 40 years?  Just one observation. 

"I think that you're right-on as far as Medicaid is concerned.  Hopefully, reform will continue so that the program can be used for the truly needy.  I also think that the insurance carriers are not doing enough to simplify the product."   

Barry J. Fisher, CSA, LTCP Vice-President & Chief Marketing Officer Republic Marketing Group, Inc.  New Braunfels, Texas   


LTC Comment:  One thing is for sure.  The state of the LTC insurance market elicits considerable thought and passion.  For decades now, people and companies have been entering that business with high hopes because of the promising demographics and leaving it later discouraged and broke.   

For my part, having presented the evidence as clearly and convincingly as I'm able, I just don't know what it will take to convince the industry and the government of one simple truth: 

"You can't sell apples on one side of the street when they're giving them away on the other." 

But they say success is 10 percent inspiration and 90 percent perspiration.  Persistence pays as this year's enactment of the Deficit Reduction Act proves.  So let's all do all we can do.  Carry on. 

Steve Moses