By Rob Billingham, Editor, InsuranceNewsNet

December 15, 2006

In a November article, Consumer Reports slammed long-term care (LTC) insurance. It happened after Long-Term Care Awareness Week in November, an event sponsored by the American Association of Long Term Care Insurance.  Consumer Reports stated, “If the people who sell long-term-care insurance have their way, you'll soon feel even more agitated than you might feel already about your financial future.”

Those “people” are producers, carriers, distributors and others that comprise our industry.

Consumer Reports called the awareness week a “scary P.R. push.” The American Association for Long-Term Care Insurance provided its 4,000 members with press kits.

According to the Consumer Reports article, the LTC industry is holding people back from making sound financial decisions. Consumer Reports said, “Most people, though, are rolling their money into mutual funds, not using it to buy insurance--generally a smart move, in our view.”

“If everybody could save enough money to replace their house, liabilities, or pay for LTC, sure a money savings method would be all you needed. But the truth is that American’s don’t save enough. That’s why we need insurance,” said Jesse Slome, Executive Director of American Association for Long-Term Care Insurance in a Friday interview.

Over the years, Consumer Reports has taken its shots at LTC insurance.

“It’s time that Consumer Reports stops looking at LTC insurance in the rear-view window and begins looking out the front windshield,” said Slome, indicating that Consumer Reports is not acknowledging changes in the past few years.

In promoting its 3-year old report on LTC, Consumer Reports stated, “Expect to hear lots of reminders not only about how little Americans--especially baby boomers--have saved for retirement but how expensive it could be to pay for care in your home, an assisted-living facility, or a nursing home. A long-term-care policy will not only pay for such services but also keep you from being a burden to your loved ones--or so the sales pitch would have it.”

Sales pitch? According to Slome they are doing a sales pitch of their own.

“The goal of Consumer Reports is to promote their report – a report full of inaccuracies and quite dated. Some of the companies they rank as the best are no longer offering products,” said Slome.

According to Consumer Reports long-term care policies are too risky and too expensive for customers. But can you hinge a comprehensive financial plan simply on the savings component in mutual funds? Where are the guarantees on that income?

On the other hand, statistics show that at an average daily rate of $203, an average nursing home stay of 2.4 years costs about $178,000, making it virtually unaffordable for many Americans.

LTC insurance is entering a new phase, where products are focused on payment and coverage flexibility to help grow a policyholder’s income through the years. As the industry matures, more information is helping to develop better products and educate the consumer.

Regarding Consumer Reports, Slome said, “They have their bias – a goal against all kinds of insurance. It’s time for them to enter the real world.”

© 2006 InsuranceNewsNet, Inc.