The long-term care insurance (LTCi) market has suffered from slow growth for several years. But it received a welcome boost with the launch of “The LTC Source,” Genworth’s educational training, sales and marketing website for advisors.
The Web page, which is connected to Genworth’s website, helps advisors determine possible long-term care funding options. It is designed to start the conversation between advisors and clients, said Lou Hensley, chief commercial officer of Genworth U.S. Life Insurance division.
By asking advisors a few simple questions, the site’s “Solution Selector” tool helps determine the rough cost of LTCi coverage. The design of the LTC Source Web page is similar to life insurance Web pages that ask basic questions when calculating premiums for life insurance coverage.
“Financial professionals are in an ideal position to start that conversation and propose a solution,” Hensley said in a news release.
Derick S. Guyton, a long-term care specialist with United LTC in North Myrtle Beach, S.C., said the site would be of most help to new agents.
“For a sales professional who is new to long-term care, it's a great tool and simplifies what may be best for the client,” Guyton said in an email to InsuranceNewsNet. “But from a long-term care professional’s point of view, I already know exactly what product to recommend to them based upon their needs and financial situation.”
The kind of conversation Hensley referred to is one that many public policy experts say needs to take place if an aging population is serious about protecting itself from the cost of long-term care, which can run as high as $90,000 a year in some places.
Many people believe, erroneously, that Medicare covers the cost of long-term care. Although Medicaid is designed to insure the poor and pay for long-term care costs, applicants have to show proof of very few assets in order to qualify.
Thus the need to expand private LTCi.
But since 2009, sales in the individual LTCi market have stayed between 220,000 and 250,000 policies. This is down from a peak of 754,000 policies in 2000, and even below the 380,000 policies in 1990, according to Marc A. Cohen, chief research and development officer with LifePlans, Waltham, Mass.
Lower investment income due to low interest rates also has made it difficult for carriers, which have had to boost reserves only to see profits dwindle.
Carriers choosing to remain in the LTCi market, have had to raise premiums to make up for underpricing and to ensure the segment was operating profitably.
As a result, surveys indicate many consumers find long-term care insurance too expensive, which has translated into lackluster sales.
In 2014, costs for new LTCi coverage rose an average of 8.6 percent compared to 2013, according to the 2015 Long Term Care Insurance Price Index compiled by the American Association for Long-Term Care Insurance (AALTCI).
In 2014, a healthy 55-year-old buyer of a LTCi policy could expect to pay a premium of $1,060 per year on average for $164,000 worth of benefits compared with an average premium of $925 for equal coverage in 2013, according AALTCI.
“Rate increases are the result of both higher claim costs and the historic period of low interest rates,” said Jesse Slome, executive director of AALTCI, when the latest numbers were released earlier this year.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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