Monday, July 29, 2013
A rise of one percent in investment return on fixed interest instruments could generate an additional $100 million or more in annual revenue for insurance companies with blocks of long term care insurance.
“The long period of historically low interest rates sustained by the Federal Reserve has impacted long term care insurance companies,” explained Jesse Slome, executive Director of the American Association for Long-Term Care Insurance. “No one has really thought about the outlook when interest rates rise again.”
Slome was discussing the economic outlook with executives who market long term care insurance. “When interest rates rise, insurers will earn more which they will need to pay claims and also to meet profit objectives for their long term care insurance product lines. There is a real reason for optimism in our industry because we are already seeing interest rates rise.”
“The impact is not immediate but will positively effect revenue over time,” explains Claude Thau, a leading industry expert in Overland Park, Kansas. According to industry professionals, when the portfolio rate earned on a company’s in-force business increases by one percent, a long-term care insurer with $10 billion in reserves will gain roughly $100 million of additional revenue annually. “This amount is prior to any federal corporate taxes that may be due on that additional income,” Slome clarified.
According to the Association the two largest long term care insurers include Genworth Financial Inc., with over 1.1 million policyholders and some $9.96 billion in policy reserves. John Hancock, owned by Canada’s Manulife Financial Corporation, has two companies with long term care insurance. The two entities insure over one million individuals and have roughly $8.0 billion in policy reserves. “There are many other large insurers who will benefit as rates rise again,” Slome shared.
Established in 1998, the American Association for Long-Term Care Insurance advocates for the importance of long term care planning and supports insurance professionals who market the complete range of planning products. The Association makes available free consumer guides providing the most current information as well as tips to reduce the cost of long term care insurance.
Monday, July 22, 2013
A report citing the largest open long term care insurance claims has helped portray the industry in a positive light.
“Many of the negative media reports about long term care insurance are based on partial and even inaccurate information,” declares Jesse Slome, executive director of the long term care insurance industry trade group based in Los Angeles, CA. “Telling the story of how insurers paid $6.6 billion in claims last year will hopefully make people aware and comfortable that this protection is important and does indeed protect millions.”
Earlier this week the Association published the findings of its annual study of the largest open claims. The report shared that the largest open female claim had reached $1.8 million while the largest open claim by a male had reached $1.3 million. “Of the 264,000 claimants paid benefits last year there are large and small claims,” Slome acknowledged. “Sharing information on the largest will hopefully show people that the risk is real and the protection can be highly beneficial.”
The Association’s awareness campaign has already generated media coverage with the news item appearing on the website of The Wall Street Journal, as well as on CBS news and Yahoo Finance, one of the more popular financial websites. “In addition, we have seen the news report on several hundreds websites hosted by local newspapers, regional media and local television stations,” Slome confirmed.
“People who own long term care insurance need to rest assured that insurers pay claims to the tune of about $18 million a day,” Slome states. “People who have no plan in place for dealing with the real risk of needing long term care need to know this protection can help spare their family the emotional and financial toll associated with their care.”
Monday, July 15, 2013
Five audio recordings of sessions involving state insurance commissioners and staff discussing long term care insurance regulations are available online reports the director of the American Association for Long-Term Care Insurance.
“The National Association of Insurance Commissioners (NAIC) Senior Issues Task Force meets regularly to discuss important regulatory matters pertaining to this important industry,” explains Jesse Slome, executive director of the long term care insurance industry trade group. “Recordings of the sessions are made available online and are now ready for interested parties to listen to.”
Slome shared anyone taking the time to listen to these audios will realize how enormously complex a topic long term care insurance is. “Much of the discussion focused on important matters like rate increases and even the insurance commissioners shared their approaches are all over the board”, Slome shared with insurance agents participating in a regular executive level chat. “If you listen to the discussion it becomes very clear how enormously complex the issue is.”
The participants in the meeting are very bright, committed individuals Slome noted who know they must take a balanced approach in their efforts to both protect consumers as well as maintain a market for private companies offering protection. “At one point one of the Commissioners shared the recognition that they had no incentive to run companies out of the business,” Slome shared. “If Medicaid is to be saved as a taxpayer paid program for the poor, States realize having private individuals be responsible by planning is crucial.”
The long term care insurance industry is still relatively young Slome notes. “The first policies were designed and marketed in the 1980s but it took years before the product really caught on.” Slome added. “Much has changed in the past 20 years in terms of health as well as economic demography and so the long term care insurance providers are working with insurance commissioners to keep improving solutions that serve the public and taxpayers who today bear the majority of the cost of providing long term care.”
Those interested in listened to audios from the June 10-13, 2013 NAIC Task Force can visit the NAIC’s website.
Monday, July 8, 2013
Dave Ramsey’s recommendation that consumers consider long term care insurance is welcomed says the director of the American Association for Long-Term Care Insurance who notes Ramsey is mistaken in several critical areas.
“Dave Ramsey is one of America’s most listened to financial radio talk show hosts and we welcome hislong term care insurance expert Jesse Slome, AALTCI recommendation that consumers look into long term care insurance planning,” declares Jesse Slome, executive director of the long term care insurance industry trade group.
Slome shared Ramsey’s post to a reader inquiry that read: “I’m a strong proponent of long-term care insurance once a person turns 60. Prior to that age you have less than a one percent chance of spending time in a nursing home, so I wouldn’t spend a dime on it until then.”
Ramsey shared the rationale for his age recommendation by writing, “A lot of agents and companies try to sell long term care insurance to people who are 40 or 50 years old, and I just don’t believe in that stuff. But once you hit age 60, your chances of using it increase almost daily. At that point, it’s a smart buy, and you’ll get a great return on the investment.”
“This is where the great disconnect comes in and we’d welcome the chance to better educate Mr. Ramsey so he can best advise his listeners,” Slome shared. “Long term care insurance requires applicants meet health qualifications which become more difficult after age 60. In fact, a quarter of applicants between ages 60 and 69 are declined coverage when they apply because of health conditions.” The percentage of declined applications increases to almost 50 percent after age 70.
“Setting the bar at age 60 will cause many of Dave Ramsey’s listeners to wait to look into long term care insurance and find they are uninsurable,” Slome cautioned. “Today, one can buy newer policies in your 50s that lock in your health insurability and have features that allow you to add to coverage at older ages. That is smarter planning we hope one day to make Mr. Ramsey aware of.”
Furthermore, Slome noted that Ramsey’s connection with nursing home coverage is ‘old world’. “The majority of long term care insurance today pays for home care,” Slome notes. “So much has changed except for the advice often shared by many and we will write to Mr. Ramsey with the hope of sharing some of the more current information.”
Monday, July 1, 2013
Two new long term care insurance audio programs comparing and detailing hybrid long term care insurance options were made available as part of the nation’s largest long term care insurance online resource center.
“There is increasing interest in hybrid long term care solutions including a growing number of life insurance options,” explains Jesse Slome, director of the American Association for Long Term Care Insurance. “It is important for insurance and financial professionals to understand how the various hybrid LTC options work so they can compare and better educate their clients and prospective clients.” Hybrid LTC products include life insurance that pay accelerated benefits should the policyholder need qualifying long term care services.
The new audio programs were added to the Association’s Online Long Term Care Insurance Learning Center that currently features nearly 100 training audios. Each of the two new audios is approximately 20 minutes and features an interview with Shawn Britt, Director, Advanced Consulting Group for Nationwide Financial.
“There are significant differences between life insurance policies that offer long term care insurance-like benefits,” Slome explained. “Some offer more dollars should you need long term care while others offer a higher death benefit if you don’t.” The second audio focuses on ways to market and approach the differences to consumers. “Shawn uses a great analogy to a fruit basket as a way of visually describing the differences and the different approaches to both men and women.”