“The fundamental issue is clients want and need to understand all the options they have, so advisors need to be better educated to speak fluently about them,” says Andrew Bucklee, head of insurance solutions distribution for Lincoln Financial’s wholesale distribution arm in Radnor, Pa. “Nine out of 10 advisors expect demand for LTC protection to increase over the next five years. They need to have confidence about having these conversations with their clients.”

Improving LTC’s Image
The news is far from all bad. Last year a record $7.85 billion in benefits was paid out to 250,000 individuals, notes Slome. “Total LTC insurance benefit payments increased by 5% from the prior year,” he says.

In other words, as Cain puts it, “From the policyholders’ perspective, it works.”

While the industry may be faulted for not trumpeting its successes sufficiently, it has instituted a number of attractive innovations lately. For instance, some providers are allowing gradual rate increases, or the option to roll back benefits to save money. “There are significant changes to both traditional and linked benefit products that make them far more consumer-friendly, in terms of their benefits and features, and in how advisors and agents can approach consumers,” says Slome.

He further cites “creative inflation growth options, where the consumer can significantly reduce costs and lock in their health insurability while retaining the flexibility to add benefits at a later date if they want and can afford to,” he says. “That flexibility makes some of these newer products much easier to sell. It’s always easier to sell a policy that costs $1,500 a year than one that costs $3,000 a year, with the flexibility to add features later.”

True innovation in LTC offerings has been a long time coming. “In the past, we saw new generations of the product, but that just meant more conservative actuarial assumptions and higher prices,” says Cain. Now, he says, new products with inflation-protection options “where you are buying as you go, to gradually increase the value of the policy over the years so it’s not just a one-and-done purchase,” are truly creative, he says. “We are also seeing more hedging, where there is co-insuring, and catastrophic policies where there might be a long deductible period for, in effect, greater risk sharing.”
Cain applauds these advancements. “We are now at a point where the industry is in better alignment,” he says.

Options For Existing Policies
For clients with existing policies that no longer seem affordable, advisors have several tweaks to suggest. “People always have the option to reduce the years of coverage, lower their current daily benefits, reduce inflation protection and increase the elimination periods,” says MAGA’s Gordon. “We have been able to reduce some of our clients’ benefits, and it has allowed them to retain very meaningful coverage.”

The variety of hybrid offerings has also grown. “There are far more insurers offering these linked products,” says Slome.