No one, including me, wants to see higher premiums on long-term care insurance policies.  That being said the realities of the marketplace, economy and claims experience requires that insurance companies offer products that are viable for years to come.  Prudential has been indicating to us for some time that California rates and claims experience were becoming a big issue for them.  I’ve been telegraphing to you for months now that a LTC3 new business rate increase and product changes were imminent. Prudential long-term care has been one of our best selling products for the last 5 years. Now, thanks to the glacial workings of the California Department of Insurance, consumers here will have fewer long-term care planning choices.

If you have any Prudential LTC3 proposals pending with clients you need to act today.  Applications must be in our office by Monday, February 24, 2012 so that we have adequate time to process and overnight them to the home office prior to the February 29^th deadline.  Employer Sponsored Program (ESP) employer applications must also be in the home office by February 29^th.  You will have 60-days from the date of home office approval to submit these applications to the home office.

PLEASE CLICK HERE to download Prudential’s official announcement and read carefully.  Contact your BJFIM/Paradigm marketing representative for proposal refreshes and help.  Remember, Prudential LTC3 is very competitive and the 50% cash alternative benefit is the best in the industry. If you haven’t purchased a policy on yourself, Prudential offers a 5% affinity discount to agents and their spouses.

You’ve got 30-days to make the sale.  Please let us know how we can be of assistance to you.

CLICK HERE to register for our February 2, 2012 webcast featuring more information on this and other important sales opportunities.

barry@paradigmins.com

This apparent sudden turn of events comes as little surprise to those of us tracking this issue.  Conventional wisdom in Washington, DC has, in recent weeks, come to the realization that a program as ill-conceived as CLASS was a bridge too far despite the the powerful political forces in support and the obvious need for Americans to have expanded options for long-term care planning.

As CLASS’ demise has become more and more evident the question that has plagued me is this; since CLASS was an integral part of how the Obama Administration planned to pay for PPACA would it’s death mean that health care reform would have to be revisited?  Apparently not.  As the above referenced article states:

Technically, Health and Human Services Secretary Kathleen Sebelius has most of next year to make a decision. As long as CLASS remains on the books it counts as reducing the deficit in the ten-year estimating window used for federal budget purposes. That’s because CLASS would collect premiums for a number of years before it paid any benefits. The budget quirk may make it tempting to maintain at least a shell of a program.

So, the “Ponzi” scheme (not my words — Senator Kent Conrad, (D) North Dakota) known as the CLASS Act. will now become a doppleganger of sorts; “a ghostly double or counterpart” (Dictionary.com) of it’s former self.

Now it becomes vitally important for consumers to take charge of their own long-term care planning. There will be no government bailout and the creaky safety net of Medicaid (Medi-Cal) will continue to fray.  This means that the best hope for the public are insured private long-term care planning solutions sold by independent insurance agents and financial planning professioinals who will be able to help them with a growing number of traditional and linked LTCi products.

As we discussed in our web cast this morning, NO LONG-TERM CARE INSURANCE BROKERAGE GENERAL AGENCY is better positioned and more prepared to help you assist your clients in this vitally important arena.

Check out our website and contact us today.

Sincerely,

Barry J. Fisher

barry@paradigmins.com

Over the past few months I have spent a great deal of time exploring new products and companies that fit into our long-term care planning universe.  One of my discoveries is that life and LTCi carriers are beginning to embrace online application processes.  Since more agents are selling insurance over the phone, sometimes utilizing ”GoToMeeting”-type technology, it’s clear to me that brokers can do more with less and increase their profitability.

As we adapt our product offerings and take advantage of new opportunities, we know that many of our brokers may not specialize in the sale of life or long-term care insurance. Therefore our goal continues to be to make the independent producer’s life easier while helping them provide their clients with top quality products and services.  Our intent has never been to be a ”big-box” brokerage general agency; our goal, however, is to give you access to life and LTCi products that are easy to understand and good consumer values.  I believe that we have a real winner with Genworth Financial’s Life Quick Request (LQR).

LQR is an online application and policy fulfillment process. You can illustrate and apply for Genworth’s Colony Term UL 10, 15, 20 and 30 as well as their new LifeLong Term UL product series.  The Colony Term UL series is competitively priced against ordinary term life policies with one distinct advantage; since it is on a UL platform the insured can extend their policy during the term of the plan at their attained age, original underwriting classification and a contractual guaranteed rate.  LifeLong Term UL is for clients who need coverage for periods longer than 30 years. With this program you can dial-in a premium payment period up to age 120.  LifeLong Term UL is not built for cash value so the rates are extremely competitive.

But this isn’t just about competitive pricing. The online LQR process is simply awesome.  Several weeks ago I needed to purchase a life insurance policy on Susan.  I sat down at my kitchen counter and spent less than 15 minutes quoting out the options, choosing the plan and then answering a few questions.  Once completed I submitted the information electronically to Genworth and they took the process from there.

At that point the system allows you to print out or email  a short consumer brochure that clearly explains the process to the client.  Within minutes I received an email confirmation that the ticket had been received by Genworth.  Our case manager, Jolene Mitchell, also gets notified that a LQR ticket has been submitted so that she can track the process for the agent. Within hours Susan got a telephone call from Genworth to set-up a 30- 45 minute telephone interview where they complete the application and set-up whatever medical exams are required. Within a week the medical was done, the APS was ordered and we should get the underwriting decision shortly.

LQR also helps the agent field underwrite the risk.  With a simple click, you can open the Genworth underwriting guide have a good sense of the client’s probable rate class. You can also work with your BJFIM/Paradigm marketing representative who have access to the Genworth underwriting team.  Regardless, LQR reduces cycle times, improve case placements and reduces the number of APS’s that are required.  Just as easy as 1-2-3!

LQR is the first in a series of easy online selling tools that Genworth will be introducing over the coming months.  You will want you and your support staff to be in on the ground floor of this opportunity.  Join me for a web cast on Tuesday August 23rd at 10:00am when the Genworth LQR Team and I demonstrate this great sales tool.  CLICK HERE TO REGISTER!

barry@paradigmins.com

We dodged a scud missile last week. As my email and blog post regarding AB999 (Yamada) indicated, our Department of Insurance and a number of state legislators are working overtime to further hobble the California long-term care insurance marketplace.  Thanks to the efforts of industry and agent groups along with those who took the time to call and write selected State Senators, AB999 was “held-over” by the Senate Insurance Committee.  This is good news but AB999 is not dead. The fight will be rejoined in the second half of the legislative session (2012). AB999, as it currently stands, is rate stabilization on steroids. If passed in this form the law would cause great harm to consumers making traditional LTCi affordable only for the very wealthy or an endangered species.  We will keep an eye on AB999 and advise if “the beast” rears its ugly head again.

Affordability is a key issue when speaking to clients about long-term care insurance.  In today’s economic environment consumers are reluctant to make financial decisions that they may need to live with for decades. That being said new business long-term care insurance premiums are set to increase significantly as the handful of remaining companies either “refresh” rates or introduce new more expensive products.  5% compound inflation protection rates are expected to increase as much as 50% and other adjustments to key product components is likely.

And, while I know that you are probably tired of hearing about the “fire sale” that we’re currently in the midst of, here’s a question that may not have crossed your mind as it pertains to these pending product and pricing adjustments; what happens if a company cannot get their new rates or products approved in a timely manner by the California Department of Insurance?  They could withdraw (as John Hancock has) leaving consumers with even fewer choices.

Underwriting is also getting tougher in the world of traditional LTCi.  The required minimum of seven lives, for our only simplified issue multi-life option in California (Prudential), is increasing to ten lives in less than 30 days. It wasn’t so long ago that we had two companies offering simplified issue at three lives. How long Prudential remains in this market space is any one’s guess but it does seem that we have a shrinking opportunity to help business owners who may benefit from a simplified issue scenario, not to mention tax deductible premiums and tax-free benefits.

One more item I’d like to share with you before I get to my “tease” at the beginning of the post. In talking and listening to scores of agents and consumers over the past few months a consistent theme has emerged.  (1) People who purchased their long-term care insurance 5, 10 or 15 years ago are extraordinarily pleased that they have the coverage at a price that now pales compared to similar coverage today.  (2) Agents who have not spoken to their clients in the last few years about LTCi are stunned to see how much new business premiums have increased.  The take away here is that early adopters made the best choice from a cost-to-benefit perspective and that those who continue to put off this important risk management decision will pay either higher premiums or not be able to get coverage at all.

In closing let me remind you of a study that Genworth did last year of 1,000 policyholders who purchased LTCi through their independent distribution channel.  In only 13% of the cases was the sale initiated by an agent.  87% of the time consumers had to seek out an agent to sell them a policy. What conclusion do you draw from these survey results?  The words “under-served” certainly comes to my mind.  With this thought don’t let your clients be part of that 87%.  It’s up to you to discuss long-term care planning with your clients.  If you don’t, they will either purchase from someone else, or worse, not have the coverage they need in the future.

We have the tools and expertise to help you communicate with and educate your clients about the need for long-term care planning.  Call us today for more information.

barry@paradigmins.com

1. New business long-term care insurance premiums will sky-rocket making them unaffordable for the vast majority of consumers;
2. The few remaining traditional long-term care insurance companies currently doing business in California will leave the market;
   
3. Both of the above!

Time is short. The State Senate Insurance Committee hearing on AB999 is Wednesday, June 22nd.  If AB999 is not stopped NOW it will likely sail through the Senate onto Governor Brown’s desk. ACHLIC, ACLI, AHIP CAHU and NAIFA have come out in opposition to AB999.  CLICK HERE to read why this legislation is burdensome and what it will do to the long-term care insurance marketplace and California consumers.

You too can help.  I’ve posted a notice from John Hancock that lists the members of Senate Insurance Committee. Fax these state legislators.  Let them know that you do business in their districts and voice your support of our industry’s positions. Be nice, be respectful but be firm. I have called the aides to two key players (Correa and Lieu) and have left messages.

Over the years I’ve written articles and Blogs about the incidence and severity rate increases in long-term care insurance. I will be happy to continue this discussion in future posts.  That being said, AB999 is bad legislation. It is a a solution looking for a problem.  Please voice your opposition no later than tomorrow.

barry@paradigmins.com

Another hot topic at ILTCi was the pending meltdown of the Medicaid (Medi-Cal) system that has been crowding-out private sector LTC solutions for decades.  The fact that Americans are able to easily become welfare recipients so that other tax-payers can subsidize their long-term care has caused many to rely on a government solution that is based on political calculus.  Conventional wisdom  currently states that of all of the Federal entitlements Medicaid is likely to be cut back first and hardest leaving some wondering how a good portion of America will be able to afford care later in life.  CLASS is hardly the answer.  Why some think creating a new unsustainable government program to save an already faltering legacy of the nanny state is a mystery to me.

Regardless of industry challenges and government failures the need for individuals to make sure they have enough liquidity to pay for a likely long-term care event has not gone away. But there is good news. The world of long-term care planning solutions is expanding beyond traditional products.  This is not a contradiction to previous statements.  There has been a consolidation in companies offering  traditional LTCi.  But as we continue to search the marketplace we’re finding a myriad of long-term care planning solutions, life, annuity, disability and critical illness products (linked/hybrids),  that will provide consumers with benefits if they suffer from a chronic illness.  These products, while not traditional LTCi, suit different age groups, lifestyles, budgets and planning objectives.  They also allow a consumer’s premium dollars to “multi-task” providing them with important benefits when they need or choose them.

Before telling you about the new products  BJFIM/Paradigm will begin rolling out in the coming weeks let me clearly state what should be obvious to most.  WE, I, OUR AGENCY, has not abandoned traditional long-term care insurance.  There is no substitute for those who can afford and qualify for it.  Sadly, as the traditional market evolves pricing is becoming an increasing challenge and underwriting is likely to tighten.  As agents we need to be committed to indemnifying for the long-term care risk.  All products that do this ought to be considered based on the client’s personal circumstances.  We would be remiss if we ignored long-term care planning solutions that didn’t fit into the tight box of traditional tax-qualified long-term care insurance.

Let’s accept the fact, for the moment, that traditional long-term care insurance is the standard by which other solutions should be judged.  Why?  As we look at the other alternatives that are now available we need to create a context and baseline; a comparative. This doesn’t mean that alternatives to traditional products are inferior, they are merely different and designed to accomplish multiple tasks. In reality this is a good thing; we all talk about CHOICE in health care products, why shouldn’t consumers be able to  choose the priorities of their life, annuity, disability or critical illness policies. This is probably more of a brain shift for agents than it is for consumers.

Why do I believe that traditional long-term care insurance is the baseline for long-term care planning solutions?

1. Benefit qualification in a tax-qualified LTCi policy is HIPAA standardized; the inability to perform 2 of 6 activities of daily living or suffering from a severe cognitive impairment, along with many other consumer protections provides purchasers and agents with confidence that benefits will be paid on a widely accepted standard.  Some, but not all linked products, are consistent with this standardized qualification.  This isn’t necessarily a bad thing; agents merely need to understand the differences and explain them appropriately to their prospects and clients.
2. Benefits in a tax-qualified LTCi policy are stanardized as well.  Based on the state of issue, benefits will be paid for home care,  assisted living or nursing facility.  Restrictions (if any) are clear to both consumers and agents.
3. No other long-term care planning solution can match that of tax-qualified long-term care insurance.  This is where a healthy consumer gets the most cluck-for-the buck. The current “fire sale” on several traditional products makes the long-term care planning discussion an imperative TODAY!
4. Premiums are tax deductible for many consumers and benefits are tax-free regardless of how premiums are treated. This is great for business owners.  Multi-life LTCi eliminates many underwriting challenges and takes full and legal advantage of the tax code to provide low cost benefits.

Some linked/hybrid products use benefit qualifiers that don’t always match the HIPAA definition.  Also, the cost of the long-term care (chonic illness) benefit may or may not be transparent.  Sometimes the cost of the LTC component is clear other times a company will “discount” the accelerated benefit for chronic illness based on the morbidity and or mortality of the insured at time of claim.  None of this is negative. We just need to understand which product best suits the client’s needs and explain it in the appropriate manner.

Which leads me to my last point for today.  When dealing with any long-term care planning solution suitability is the key.  A linked annuity product is probably not appropriate  for a 30-year old. A traditional long-term care insurance product with a 10-pay may work best for a business owner.  Someone who is very elderly or who suffers with Parkinson’s or Multiple Schlerosis may want to consider options that others won’t.  This is an exciting time for insurance agents who want to think through the process and help as many clients as possible. Long-term care planning solutions are on the rise; are you ready to step-up to the plate?

barry@paradigmins.com

As euphemisms go rate refresh can be tangy or pungent. Base rate premiums on 2 and 3 year benefit periods will decrease by 3% to 5% respectively. And rates with no inflation option and guaranteed purchase option (GPO) will remain unchanged. This change can be helpful in the multi-life market because it allows employers to purchase low-cost minimum benefit plans on employees so they can achieve the 7 lives they need/want for simplified issue. Prudential is our best multi-life play in California.  This is the tangy part but again “wait” should not be your word of the day.

I expect the BIG pricing HIT will be on the 5% simple and compound inflation options. If history is any judge, when other companies have repriced their 5% inflation riders we’ve seen increases of 20% to 50% depending on simple or compound as well as the applicant’s age. The younger the client the bigger the increase due to the fact the likelihood of claim is so far in the future. Also, since these are the benefits most sought after by business owners and professionals the opportunity to help your client NOW should be irresistible to both you and them.

This adjustment to the 5% inflation optons should surprise no one. The current economic climate, low interest rates and access to capital markets, has put enormous pressure on long-term care insurance companies and their ability to reserve for this future risk. Insurance carriers need to price responsibly in order to keep the promises that they’re making. Keep in mind they aren’t the Federal Government! We won’t be advised of the final new business rates until each state has held forth on Prudential’s rate action request but once approved the window of opportunity to score today’s lower rates will not be left open for long.

And in the category of “we need this like a poke in the eye with a sharp stick” the California Department of Insurance has introduced an Omnibus Long-Term Care Proposal, AB 999  (Yamada), which if enacted into law as is, will make it much harder for long-term care insurance companies to conduct business in California. While it is early in the game some think that AB 999 could cause irreparable damage to the what remains of the traditional long-term care insurance market in the Golden State.  At the very least products will get even more expensive and out of reach for the average consumer.

So my message to you should be quite clear; talk to your clients about long-term care planning each and every day. Suggest that they purchase something now with 5% compound inflation protection.  If they can’t take care of the entire need today a policy that covers part of the risk is better than nothing and it will act as a hedge against future pricing increases or product withdrawal from the marketplace.

Get all the latest on CLASS, product pricing and changes and how BJFIM/Paradigm can turn you into a long-term care planning and solutions machine.  Join us on March 21st for a webinar with all of the latest.  CLICK HERE to register.

barry@paradigmins.com

Before I give you the latest highlights, let me mention that we have a number of resources pertaining to CLASS on the BJFIM/Paradigm website under the tab “Important Announcements”. Here you can find a growing list of articles and tools that give you background and commentary.  I have also posted several Blogs on CLASS since its passage earlier this year.  We will build out a CLASS Act section on our website in the coming months and will keep you abreast of our efforts.  Suggestions on the sorts of resources you’d like to see will be greatly appreciated.

Earlier this morning I was on a conference call with Steve Schoonveld from the Society of Actuaries (SOA).  Steve spoke at a meeting we held in September and has been in the forefront of industry efforts to help CMMS make sense out of CLASS.  You can see Steve’s PowerPoint presentation from this meeting on the BJFIM/Paradigm website as well.  Here are several items that provide some clarity on the government’s progress on getting CLASS out to the public:

1. The National Debt Commission report issued December 1, 2010 recommends fixing or nixing the CLASS program. Prior to its inception, the American Academy of Actuaries stated that CLASS was “actuarially unsustainable”.  Senator Kent Conrad (D-ND) Budget Committee Chairman called CLASS a “Ponzi Scheme of the first order”.  Read the Heritage Foundation review on CLASS for more details.
2. CMMS is taking nominations for the CLASS Advisory Council through December 12.  A number of insurance industry folks have put in their names in an attempt to influence this group.
3. CMMS is still hiring actuaries to crunch numbers.  Therefore it will be quite some time until we know the cost and benefit structure of the plan. Originally when Congressional staffers “developed” the pricing for CLASS the question asked of consumers was “how much would you be willing to pay for long-term care coverage”.  The answer: $50 per month. When SOA actuaries priced the plan during the legislative debate process the cost was upwards of $160 per month.  Others have priced it in excess of $200 per month.
4. October 1, 2011 is the anticipated release of benefit plans and costs.
5. CLASS is expected to go “live” on January 1, 2012.  We still don’t know exactly what that means and what choices employers and employees will need to make.  Under the legislation, CLASS is an employer “opt-out” which means they will have to decide whether to allow voluntary payroll deduction for employees who want to enroll.
6. Calls to repeal PPACA and CLASS continue from various groups.  Politics will get even more interesting after January 1 so while many believe CLASS is here to stay, I’m not so sure.
7. You can read about the general parameters of CLASS and how it may look on the BJFIM/Paradigm website.  You can see from these articles that CLASS contains structural problems that will need to be overcome before it is viable.  At this time it’s next to impossible to compare CLASS to traditional LTCi, but it should be evident to anyone in the insurance business that for insurable consumers, private long-term care insurance will trump anything CLASS has to offer.

The opportunity for agents to utilize CLASS as a marketing or “awareness” tool for traditional long-term care insurance sales is a bit off in the future. How much money the Feds will spend to promote LTC planning and CLASS is another big question mark.  The original legislation provides sparse resources for marketing.  It will probably be up to a coalition of “concerned” non-profits and social welfare agencies to get the word out.

Selling against CLASS will not be the challenge.  Convincing consumers that long-term care planning is important will continue to be required of the agent and financial planner.  Your insurable prospects and clients will never be able to purchase better long-term care insurance coverage at a lower price than TODAY!  CLASS may raise some awareness, but it won’t change the fundamentals of our job.

Call us today for quotes and more information on our top shelf long-term care insurance products and sales support programs.

Happy Chanukah and Merry Christmas!

barry@paradigmins.com

As is my practice when writing about shifts in the tectonic plates of the long-term care insurance industry, I will start with my disclaimer.  I have no inside knowledge as to why MetLife has come to this decision.  I can only surmise and conjecture with the best of them.  Very few people know all the reasons for this action, because anyone sitting at that final decision-making table probably isn’t talking.  Suffice it to say there are many factors that compelled MetLife to withdraw from this line of business. I’m sure the choices were difficult and not made lightly as they impact many MetLife employees and colleagues I have had the pleasure to work with.

The factors impacting long-term care insurance product viability have made for lively discussions over the past several years. I’m sure some or all of the following, in some way, informed MetLife’s corporate leadership to give it up.

• Consumers love their LTCi: Folks who purchase long-term care insurance rarely lapse their policies.  The fact is that most of the lapses in long-term care insurance are involuntary, a.k.a. death.  This has had a detrimental impact on older blocks of business.  Unlike other life, disability and accident and health insurance policies, LTCi insureds don’t drop their policies when faced with rate increases. This wreaks havoc with older pricing assumptions and compels companies to increase reserves to cover the added risk.  Policies issued in the past five to seven years don’t face this dilemma since actuaries noticed this trend earlier in the decade and adjusted their rates accordingly.  But companies with decades-old policies struggle with this dilemma.
• Underwriting matters: This should be a surprise to no one. This is why they call it insurance!
•  The benefits consumers like (and we like to talk about) may be costing more than expected: Home and community care benefits along with coverage for assisted living facilities has allowed us to not sell “nursing home” policies. That’s great for us and policyholders but it is knocking the stuffing out of claims utilization. Add to this the challenge of maintaining 5% compound inflation protection in an almost zero interest-rate environment and pricing pressures begin to take their toll.
• Claims reserves must be established and maintained: Home office actuaries constantly analyze and review a block of business for its viability.  For the reasons mentioned above if a series of policies begins to require more reserves, in order that claims payment be assured, money must be set aside for that purpose.
• If interest rates were 7% we probably wouldn’t be having this discussion! Today’s low interest rate environment and tight capital markets makes adding to reserves a painful experience for any insurance company. When this happens it has a negative impact on the carriers return on equity.  ROE is what drives a company’s stock price, and when it goes down boards of directors and institutional stockholders get cranky.
• Then insurance company executives have to ask the question “is any line of insurance worth this sort of pain”? In the case of MetLife and others that have left the LTCi marketplace over the past decade the answer has been “no”.

Those companies remaining in the traditional long-term care insurance market have been scrambling to assure the field that all is well. I have been on the phone with a number of our key carriers since yesterday afternoon.  “Business as usual” is what I’m being told and I have no reason to disbelieve.  That being said, I imagine they’re all taking another hard look at pricing and underwriting practices and developing strategies to cope with the short list of factors above.  Keep in mind, not all companies have the same blocks of business or the same pressures. Some may have done better jobs of managing their risks.  The remaining field, we hope, are committed to staying the course. Time will tell, but regardless, we have much to do in the meantime.

Now let’s return to making lemonade! Our phones at BJFIM/Paradigm have been ringing off the hook since this morning and not because people are upset or complaining (at least not much).  My brief email notice yesterday afternoon has spurred many of you to action. You’ve seen the opportunity and are reaching for it. Let me review:

• MetLife Multi-Life is not gone yet! We still have a few weeks to provide employer groups, with as few as three lives, simplified issue long-term care insurance.  We’ve posted the deadlines on our webside (CLICK HERE) or call your BJFIM/Paradigm Marketing Representative for everything you need to help business owners who may need an underwriting edge.
• MetLife may be leaving the field of play but others aren’t. We have a number of fine companies, Prudential, Genworth, American General, United of Omaha, Transamerica (just to name a few) who are still open for business.
• I’ve said it before and I’ll say it again; “traditional long-term care insurance policy benefits and pricing will never get better than they are today”.  If it hasn’t become clear to you yet, we are in perpetual fire sale mode.  New rates will be in a constant state of upward adjustment.  Underwriting is not likeliy to get any easier.

The need for long-term care planning has not gone away. Companies will come and go. I remember the hand wringing when CNA left the field back in the early 2000s. The rest of us are still here. Companies are paying their claims and the world goes on.  BJFIM/Paradigm is here to help.  Call us today!

barry@paradigmins.com

In my March 23, 2010 BLOG post, Opportunity Amidst The Rubble, I called the CLASS Provisions of the Patient Protection & Affordable Health Care Act (PPACA) a “Ponzi scheme”.  In a July 2010 paper published by The Heritage Foundation, James Capretta and Brian Riedl came to the same conclusion. If you attended our breakfast meeting a few weeks ago at the Woodland Hills Country Club you would have heard long-term care insurance actuary and point man for the American Academy of Actuaries and The Society of Actuaries on CLASS, Steve Schoonveld, explain to why those two organizations deemed CLASS “actuarially unsustainable”.  You can view his PowerPoint presentation HERE and for a somewhat “edgy” overview of CLASS that I prepared back in April click HERE.

That being said, the purpose of today’s post is not to rail against CLASS. U.S. Department of Health & Human Services is currently in the process of sorting through the issues it faces with creating a viable and actuarially sound long-term care benefit within the parameters set forth by Congress in PPACA. Believe me, they have their work cut out for them.  When we do start getting the facts I’ll share those with you along with analysis. Right now, CLASS is a talking point and not a reality.

So why am I revisiting the topic? It has come to my attention that many agents around the country are using CLASS as just that; A Talking Point!  They are actively reaching out to their business owner clients to let them know that:

• When CLASS does become a reality they will counsel them on the advantages and disadvantages of the program for their employees;
• Regardless of what CLASS actually does look like it is ultimately designed for uninsusrable Americans;
• Because of this fact the cost of the program will be high and the long-term viability dubious; and
• Now is the best time for business owners to purchase long-term care insurance with tax deductible premiums on themselves, spouse and key employees!

Now I know what you may be saying to yourself; “Barry, things are tough out there. My clients are choking on health insurance premium increases.  The economy is uncertain. They’re laying off employees. It’s really hard for me to talk to them about buying something else particularly long-term care insurance.” I know all of this but here’s something you may be missing.  Traditional LTCi sales are up this year particularly in the small employer group multi-life segment.  Here’s why:

• The need to protect income and assets against the ravages of a long-term care event have not diminished.  In fact they’ve gotten greater!
• I know that some employers are struggling but many are setting cash aside for a future expansion or a rainy day. 
• Tax deductible premiums and tax-free benefits are a major plus particularly in light of potential income tax increases.
• Traditional long-term care insurance is a bargain and it will never be less expensive than it is today.
  • Compare premium rates today to those from just a few years ago
  • Ask someone who purchased a ten-pay plan 11-years ago how happy they are now
• As Susan Blais’ email to you yesterday pointed out, multi-life long-term care insurance takes the guesswork out of long-term care insurance underwriting; you won’t be wasting your time or be embarrassed!
  • Groups with as few as 3 employees can qualify for simplified underwriting

CLASS will not be the answer for the vast majority of your business owner and upper income/asset clients.  Traditional LTCi and the new linked solutions will be.  CLASS may be your opening gambit but more long-term care insurance sales will come your way by opening the dialogue about long-term care planning issues and the solutions that you have available.

Get to your clients before the Federal Government does!  Start calling them today!

barry@paradigmins.com