LTC Insurance: A Value Product
The following is an excerpt from an article which appeared in the December, 1997 edition of LTC News and Comment:
LTC Insurance: A Value Product
By Samuel X. Kaplan, Chairman, U.S. Care, Inc.
LTC insurance stands out as the value proposition in today's overcrowded insurance field. It is a product offering unparalleled potential for growth in a market constantly driven forward by demand.
Statistics concerning the graying of America paint an impressive road map in the future direction of LTC. It is quite simply the nation's largest unfunded liability and, as such, represents the biggest opportunity in the insurance industry.
We live in a time when programs such as Medicare, Social Security and pension funds are not a panacea for old age. Although 60% of seniors at age 65 and 90% of seniors at age 80 will require LTC, 94% of nursing home costs and 90% of home healthcare costs are NOT covered by traditional health insurance plans. Medicare and Medicaid only pay about 48% of LTC costs.
Demand from the individual consumer seeking answers has pushed LTC issues and products to the forefront. Estimated market potential for LTC sales could be in excess of $20 billion in the foreseeable future.
LTC is capturing the attention of employer groups who welcome the opportunity to offer a voluntary, employee-paid benefit that adds value to their existing benefits packages. This past June, William M. Mercer, Inc. released the results of an employer survey focusing on the types of LTC programs available and the reasons for offering these benefits. Employers stated that the most important reasons for offering LTC were the "cutting-edge aspect" of the benefits and the low cost to the employers.
Seeking value in LTC products
What do employers and individuals look for in LTC products? A good policy offers a continuum of care to meet psychological, social, spiritual and practical needs. A well-designed plan provides integrated services that build bridges between acute, institutional and home care. The true value of an LTC product is measured in the degrees of independence, dignity, asset protection and choice it offers the insured.
Competitive LTC products must offer more than nursing-home care; individuals should be given the choice of a variety of settings (e.g., home healthcare, assisted living facility care, adult day care, etc.) and innovative options to suit their particular needs. When weighing value, look for the difference that sets one LTC product apart from the universe of cookie-cutter products that proliferate the market.
For example, an LTC plan that offers private duty nurse benefits (when authorized by a care advisor) extends traditional LTC boundaries into an area where many families go when seeking help in caring for their elderly or disabled.
More than any other product, LTC is a family-style benefit and the needs of the family should be considered in the plan design. Recognizing this, some innovative plans offer monetary incentives and training for informal caregivers and family members who provide services to the insured in a home setting.
LTC is also an intergenerational benefit. The best LTC policies are those that make allowances for the "sandwich" generation, facing both child and parental care issues. An option enabling an insured to "share" LTC benefits with a needy parent, for a limited period, adds value for the whole family.
Flexibility in LTC plans is essential to their value. Insureds should be able to increase or decrease their coverage annually. To extend the appeal of the product to a younger audience, an innovative option enables insureds to pay premiums on an accelerated schedule during their prime income-earning years, so they do not have to pay when they are retired.
LTC is the perfect value-added product for today's market. It costs the employer little or nothing, while providing employees and their families with protection and peace of mind. It is also the fastest growing segment of the insurance industry. The unprecedented growth we have seen in the past few years will pale in comparison to the explosion of the market that awaits. The demand for LTC products is here, and the time is now.
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