LTC
Waging the War on Tragedy with LTC Insurance
by Louis H. Brownstone
Any American who has assets to accumulate and protect must have five core products:
1. Life insurance
2. Medical insurance
3. Disability insurance
4. A retirement income plan
5. Long-term care insurance
Most Americans with assets have the first four products, but not LTC insurance.
The risk is high that assets in a retirement plan will be destroyed without long-term care. The logic is unassailable, so why don't most of us act on it?
One of the most positive attributes about the United States culture is our optimism. At an early age, we are taught that we can lick any problem, we are the masters of our destiny, and we can climb every mountain, not in advance, but whenever a situation arises. This attitude is especially pervasive among Baby Boomers and younger generations who have not experienced a major economic depression or a major war, and generally fail to plan.
Our optimism is a great national asset, but it is precisely the wrong attitude when it comes to planning for long-term care. It creates denial and procrastination. Long-term care insurance is a low priority for most Americans who believe they can worry about long-term care later. Many would agree that long-term care insurance belongs in the above list of core products, but they will avoid the issue anyway and thereby self-insure.
This leads to tragic consequences for those who become ill and have no long-term care plan.
Our mandate in the long-term care industry is to overcome this attitude. It won't be easy. We have made some major mistakes in pricing. A few rotten apple companies that have exited the industry are hurting us with some bad claims adjudication. We have allowed some misconceptions about our product to become commonly accepted in the financial community. The most common misconceptions are that LTC insurance is complicated and expensive and is therefore not a good value.
It's too complicated? Compared to what? Isn't life insurance complicated? Most life insurance agents have no idea what values are guaranteed in a universal life contract, let alone in a variable life contract. Most annuity agents have no idea whether to recommend point-to-point averaging or high water marks. They don't know the best method and timing is to annuitize a contract. Most financial planners are fortunate if they can make recommendations from thousands of mutual funds and that's only one category of products they are supposed to know about.
Long-term care insurance has a few moving parts, but in general, it is far less complicated than other forms of personal lines insurance. It's complicated to those who have not taken the time to educate themselves on the basic points. There are only a handful of carriers and products to consider. The sales track need not include the nuances that many long-term care insurance specialists think are necessary. Some policies have become so simple that selling them is as uncomplicated as selling term insurance.
It's too expensive? Compared to what? It will cost $75,000 over 30 years for a 57- year old who invests $2,500 a year or less for a four-year plan at $150 per day or a $219,000 pool of money. At 5% compound inflation, the pool of money would then be worth about $900,000 or 12 times the total cost. WhatÕs expensive about that? It sounds like a great leveraging of capital to me.
Changing our Message
We've got to change our message. Long-term care insurance is not complicated or expensive! We have to convince the financial community that this core product must be sold as part of a complete financial plan. An advisor who is uncomfortable selling it must partner with a long-term care insurance specialist.
We need a public relations campaign to spin our product more positively. This campaign needs to be aimed first at the financial community and supported by all the players in our industry. The government and the public can be influenced when members of the financial community are brought on board.
Members of the financial community will understand the financial advantages of owning long-term care insurance, but they need to understand the emotional advantages as well. The main financial argument is that long-term care insurance builds a firewall around a retirement plan. The main emotional argument is that it brings peace of mind and support to the policyholder's family in their time of need.
In my view, the long-term care insurance industry is fighting a war on tragedy. We should not be afraid to tell what it's like to die tragically.
For example, a man with cancer is lying on a gurney in his living room. He is racked with pain because a Medi-Cal visiting nurse is a day late coming to the house to give him morphine. His wife, who is weeping in the corner, is totally spent. She has been sleepless for days because she is powerless to ease her husband's agony.
A husband with moderate Alzheimer's is trying to take care of his wife with more severe Alzheimer's because he can't afford to place her or himself in a nursing home. Forty years of a loving marriage are ruined by misunderstandings that result in fighting between two angry people who can't understand why things have changed so drastically between them.
Fifteen Medicaid patients are lined up in a hallway of a skilled nursing facility. Orderlies ignore them while trying to clean their rooms. Some are sleeping or moaning and most are practically comatose. They are victims of the lack of proper care that they would be receiving in a better environment. They're going to die soon because they have lost their will to live. Let's tell it like it really is. Then people will ask, "Who wants to end their life like this?" The solution is simple create a long-term care insurance plan. Don't procrastinate. Denial can lead to disaster at any time.
We in the long-term care insurance industry are going to overcome the denial. We're going to win this war and sign up more and more Americans. We know that advances in medical science will enable us to live longer, which makes it likely that we'll get sick and need long term care.
Our story is compelling. We've covered eight million people so far and we're covering more and more every day. We'll get the CPAs, financial planners, and elder law attorneys to believe in our core product and recommend it to their clients. We can make it easy for them to do so by partnering with them. We'll talk to people in their homes and where they work. We won't stop until our war is won.
That's our story. It will take a large and not necessarily expensive P.R. effort to tell it properly. Who will step forward? Who will organize this war? It will take a concerted effort by carriers, distributors, lobbying groups, associations, the government, and concerned citizens. How can we get this done as an industry? The ball is in our court.
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Louis H. Brownstone is chairman of California Long Term Care Insurance Services Inc. The company brokers 30 high producing long-term care specialist agents throughout California. He is also chairman of its sister company, Northstar Network Insurance Agency Inc., which provides complete back office support for long-term care insurance for broker-dealers, financial planners, and agents. Brownstone is also Chairman of the National LTC Network. He can be reached directly at 800-303-1527 or by e-mail at louis@cltcinsurance.com.
