LTC Bullet:  The LTCI Manifesto

Tuesday, May 24, 2011


LTC Comment:  Why have LTC insurance sales and profits disappointed before and why are they about to explode on the upside now?  Find out in the "LTCI Manifesto" after the ***news.***

*** TODAY'S LTC BULLET is sponsored by Claude Thau, a General Agent who helps LTCi producers build business in any market (individual, executive carve-out, work-site, affinity, financial institution, referrals from other professionals, etc.). He has been expert in CLASS for 6 years and has tools to leverage CLASS for private LTCi sales. Claude is the lead author of the Milliman Broker World LTCi Surveys, was named one of the 10 "Power People" in the LTCi industry by Senior Market Advisor in 2007 and was Chairman of the Board of the Center for Long-Term Care Financing. Test Claude by calling 800-999-3026, x2241 or email him at to ask questions or get references. ***

*** 3IN4 NEED MORE AT TIMES SQUARE.  3in4's big event in NYC is underway.  Details here.  Dr. Marion (Marion Somers, PhD) rolled her souped-up, 50s-era Greyhound bus into New York City's Times Square to kick off the nationwide 3in4 Tour. On-camera interviews with producers and carriers will be used in 2011 and 2012 outreach.  The 3in4 logo is on the Prudential billboard in Times Square for most of the day in support of the campaign.  We hope to bring you an eye-witness account of the event soon. ***

*** 2011 LONG-TERM CARE INSURANCE SOURCEBOOK PUBLISHED.  Latest Data on Buyers, Claims, Partnership Plans for Individual, Multi-Life & Group LTC.  The 48-page publication is a compendium of new research conducted by AALTCI as well as the latest and most relevant information regarding LTC planning and insurance products.  For the first time, data on buyers of annuity+LTC and life+LTC products is included plus information on LTC insurance claimants.  Find details on the Sourcebook at or by calling (818) 597-3227. ***


LTC Comment:  If you aren't an "AMG"--an altruistic, masochistic genius--you may have found selling long-term care insurance somewhat daunting.  Leads were hard to find and getting harder all the time.  Converting leads to appointments required persistence and immunity to rejection.  Even if you closed a third to a half of your appointments, making a good living required skills and effort that might have earned you much more selling a different product or in a different line of work altogether.  If your role in LTCI was at the management or executive level, you struggled constantly with product development, distribution, capital management, and profitability.  You felt like the "poor relative" among your company's more lucrative products.

Good news, folks.  All that's about to change.  A vast public awakening to the need for private long-term care protection is at hand.  LTC insurance will be much easier for producers to sell and much more profitable for carriers to purvey.  Why now and not before?  Read and heed the "LTCI Manifesto." 


The LTCI Manifesto
Stephen A. Moses

Long-term care insurance is a vital financial product . . .

  • that everyone needs,
  • that many more can afford than buy it,
  • that has remained a niche product for nearly forty years, but
  • that is about to explode in popularity and sales.


Everyone in the business knows the basic facts.  Seventy-eight million baby boomers are beginning to retire.  Seventy percent of them will need some long-term care.  Twenty percent will require five years or more of expensive care.  The cost is catastrophic for the uninsured who suffer the insurable event.  Yet, less than ten percent of people age 50-plus purchase LTC insurance.

Are consumers stupid?  Or just ignorant?  Those are the usual explanations.  Either people are in denial because they don't want to think about getting old and needing help, which is really stupid.  Or they just don't understand the risk and cost.  But survey after survey shows people know they're at risk, yet they still don't buy LTCI.

What if there is a different explanation that reconciles consumers' awareness of risk with their failure to plan for long-term care?  What if the public's denial of LTC risk has been reasonable up to now, but is about to become disastrous for them?  What if everything is about to change regarding the marketability of LTC insurance?

How can we square this circle of confusion?  The answer is really very simple.

The vast majority of all expensive long-term care since 1965 has been paid for by Medicaid, Medicare and spend-through of Social Security income by people already on Medicaid.  Never mind the conventional wisdom that government only pays for LTC after people are impoverished.  That's wrong as we've proven in dozens of studies here:

People's ability for the past 46 years to ignore the risk of long-term care, avoid the premiums for private insurance, wait to see if they ever need expensive care, and if so, to divert the cost to government programs has anesthetized the public to LTC risk and cost.

Repeated education campaigns and dedicated LTCI marketing have gradually enlightened most Americans to some extent about the risk and cost of long-term care, but they are not convinced they really need to buy the insurance protection.  Puzzling?

Not if you think about it from the consumer's perspective.  Everyone's telling me I could lose my life savings if I don't buy LTCI.  OK, I get it.  But I don't hear about people actually being devastated by LTC costs; I don't see Alzheimer's patients dying in the gutter; someone paid for Grandpa and Grandma's care.  Your scary stories and my personal experience don't mesh.

In other words, consumers have internalized the risk and cost in theory, but it isn't real to them because few people have direct personal experience of catastrophic loss.  That's why, as the front cusp of the baby boomers go through the wrenching experience of providing LTC for their parents, they finally become prospects for LTCI themselves.  Wait long enough, and you'll have the attention of all the baby boomers.

But you donít have to wait.  Everything is about to change creating a tsunami of demand for LTCI in the future.

According to peer-reviewed academic research, Medicaid alone crowds out 2/3 to 90 percent of the entire market for private LTC insurance.  Now add in the billions paid for home care and nursing home care by Medicare, indirect payments from Social Security spend-through, the Veterans Administration, and other smaller government programs and you'll begin to see why the public's asleep about LTC and why LTCI remains a third-tier financial product.

Now consider the new economic reality and what it means for the government programs that currently crowd out most of the market for LTC insurance.  Boomers are retiring.  They're taking money out of Social Security and Medicare instead of paying in.  Their taxes won't be supporting Medicaid anymore.  In fact, they'll soon be a major new burden on Medicaid.

In a nutshell, the bottom is falling out of the social safety net.  That's not a good thing.  It's terrible, especially for the poor who have nowhere else to turn but to the failing government programs.  But what it means for the middle class and affluent is that they'll no longer be able to avoid LTC risk and cost while preserving inheritances for their heirs.

I predict that in the next five years:  Social Security and Medicare will be severely means-tested; Medicaid's home equity exemption will drop from a maximum of $750,000 to a figure closer to what England allows ($37,000); loose eligibility rules that permit people with large incomes and assets to qualify will be radically tightened; states will enforce estate recovery much more aggressively; home equity conversion will become a major funder of LTC; and the middle class and affluent will turn in droves to LTC insurance as the best way to avoid catastrophic spend down and public dependency.

In other words, the LTCI industry's mantra--"If you don't buy this insurance, you could lose your life's savings to LTC"--didn't work because it wasn't true.  But it will work in the future because it is about to become true.  That is the irony and the explosive potential of the current and future LTCI market.

So what should LTC insurers do?  For heaven's sake, don't bail out of this business just as it's about to take off.  Redouble your efforts to recruit, train, support and retain producers.  Develop new and better products.  Support organizations like the American Association for Long-Term Care Insurance and the Center for Long-Term Care Reform so they can educate and motivate consumers and producers.  Base your corporate decisions on the predictable future, not on the disappointing past.  Get ready!

Once you understand what's held LTC insurance back, you'll see why nothing can stop the LTC insurance market going forward.  That's the LTCI Manifesto.  If you're still unconvinced, I challenge you to interrogate me in person or on the phone.  Ask your questions.  Share your doubts.  Even if I don't convince you, I guarantee you'll receive a new and valuable perspective on the business.

Steve Moses is president of the Center for Long-Term Care Reform ( Reach him at 206-283-7036 or


LTC Comment:  While the "LTCI Manifesto" is good news for the insurance industry, it's based on very bad news for America's entitlement safety net.  More people will buy LTCI because they can no longer rely on publicly financed LTC.  We should all be mindful, however, that private long-term care insurance did not cause this problem.  It is rather the solution. 

The more people you persuade to take personal responsibility and protect themselves and their families from LTC risk and costs, the less strain long-term care will place on Medicaid and Medicare.  Every person you protect with private long-term care insurance frees up scarce public resources to help others who cannot help themselves.  More than ever before, you can do well by doing good, selling LTC insurance.