LTC Bullet:  Critical Care Could Grow the LTCi Market

Friday, July 27, 2012


LTC Comment:  Today’s “guest Bullet” makes the case that a reconceptualized version of critical care insurance could enhance the LTC insurance market, after the ***news.***

*** SPOTLIGHT ON: Medicaid and Medicare Key Numbers

Need the latest Medicaid and Medicare numbers? Your Center for Long-Term Care Reform has you covered. We have current data, updated annually, all the way back to the early 1990s. In this feature you not only have a historical archive of essential Medicaid and Medicare numbers, you have access to the current numbers as soon as they are released. Our Medicaid and Medicare Key Numbers feature is located in our Members-Only Zone website. If you need your user name and password, or are not yet a member and would like to join, click here or simply contact Damon (206-283-7036 / Zone in today and you’ll find a wealth of useful resources! ***

*** PHYLLIS SHELTON, the indefatigable LTCI author/trainer, defends the product’s cost-effectiveness in “Is LTCI Worth It?  Get Real” at LifeHealthPro. ***

*** STEVE SCHOONVELD, a veteran long-term care insurance (LTCI) actuary, has come up with 7 ideas for making the product easier to sell and easier to buy . . .

1. Allow for shorter benefit periods and longer elimination periods.
2. Remove or lower the mandatory offer of inflation protection.
3. Allow for longer waiting periods in which no benefits are payable.
4. Allow for flexible premiums.
5. Allow for purchase of coverage with pre-tax dollars and in cafeteria plans.
6. Expand the sales force.
7. Encourage combo products with additional base plans.

(Source:  “‘Refine’ Long-Term Care Insurance, Actuary Says,” by Allison Bell, LifeHealthPRO, July 23, 2012)



LTC Comment:  Our thanks to American Independent Marketing’s Larry Moore for submitting the following article.  He suggests that for more information about “Critical Care insurance” you contact the innovators behind the concept - American Independent Marketing at 800-672-7202 or GoldenCare USA at 800-842-7799. 

LTC Bullets readers should feel free to reply to with comments on today’s guest Bullet or the Shelton and Schoonveld pieces cited above.  We’ll forward your remarks to the authors.


“Critical Care Could Grow the LTCi Market”
Larry Moore

For demographic reasons alone, growth prospects for the long-term care insurance (LTCi) market remain attractive.  But agent frustrations are mounting with ever-tougher underwriting standards, longer underwriting turnaround times and rising premiums.  The result is a growing population of consumers who either want LTCi, but don't qualify or want it, but can't afford it.  Fortunately, a change is taking place with critical illness insurance to fill the insurability and affordability space evacuated by LTCi carriers.  The new CI provides a needed and welcome alternative for both consumers and agents.

Critical illness plans already cover the types of health conditions that cause most long term care claims, so adapting the product required relatively little re-tooling.  The typical "one & done" lump-sum cash benefit paid upon diagnosis was changed to a monthly cash benefit paid over a period of time, typically a shorter duration than most LTCi benefit periods.  Enhanced benefits for care received in a long term care facility were added along with full benefits for a diagnosis of Alzheimer's disease.  Restoration of benefits was included to accommodate multiple diagnoses and claim payouts.  The generic term "critical illness" became "Critical Care" to lay claim to the new marketing territory between the two product types - LTCi and CI.

Agents should resist the temptation to draw a direct comparison between "Critical Care" and LTCi because the products are fundamentally different in many ways.  Critical Care is a supplemental health insurance product.  It is for the broad market of under-insured individuals experiencing higher premiums, deductibles and co-pays along with reduced health insurance benefits.  Critical Care insurance is also designed to be attractive to the niche market of individuals either not healthy enough or wealthy enough to obtain traditional LTCi. 

Benefit access with "Critical Care" is based upon the diagnosis of a specific medical condition rather than on being "chronically ill.”  Policyholders may therefore trigger benefits sooner with Critical Care than with traditional LTCI.  Still, there are many conditions that will be paid under traditional long term care that will not trigger benefits in a Critical Care plan.  Of note, according to a 2011 American Association of Critical Illness Insurance report, 70% of all LTCi claims paid are a result of stroke, cancer, heart attack and Alzheimer's disease so the cross-over in the risk protection provided by the two product types is substantial.  It is this fact, combined with the underwriting differences, that creates a safe haven - and a new solution - for agents and their clients. 

More new carriers with new and creative solutions are exactly what the market needs now.  Traditional LTCi is simply not for everyone; sales penetration rates tell us so.  The government will never be the answer for most.  Just as life and annuity products with living-benefits for LTCi are appropriate options for some consumers, Critical Care will breathe new life into a market that, quite frankly, could use some help right now. 

Larry Moore is Director of Marketing for American Independent Marketing (AIM).  For more information on Critical Care, contact AIM at 800-672-7202 or GoldenCare USA at 800-842-7799.