The Last Word On LTCI...
Water Balloons

Ronald R. Hagelman Jr.
June 2013 Issue

Perhaps the most vivid image of Newtonian physics is the predictable nature of the common water balloon. Squeezing the balloon displaces the water; yet the obvious fact is that the water has been only temporarily relocated. However, squeezing too hard will put the integrity of the entire balloon in jeopardy.

In this column you will never find doom and gloom; however, you can find caution. LTCI as a stand-alone health insurance alternative may be more fragile than we care to admit. More than 90 percent of companies offering LTCI 10 years ago are gone! Have you thanked your LTCI carrier of choice today?

I have been in brokerage for 33 years and, before me, my father was in the business for more than 40 years. Thus, I do understand the intrinsic benefit of open competition, market differentiation, creative product design, focused service and sales support. I also understand that the current LTCI market is strained and vulnerable (like that water balloon mentioned earlier).

While production has mushroomed during the last 18 months, applications are falling on fewer and fewer committed and very courageous companies. With only a handful of dedicated companies remaining, we must be very careful how we squeeze the balloon.

We have so much work yet to accomplish. Keep your head down and keep selling, but please understand clearly the privilege afforded you and your customer each time you successfully complete an application.

It is not my religion that is important in my life, it is my faith. The strength of that faith is my stability. It must be exactly the same with long term care risk abatement. Each time you stop to “explain” long term care and the potential impact of a serious claim, the sure and certain truth of the need is what ultimately prevails. The risk is real, the cost can be enormous, and the solution is simple. Proclaiming the truth is not difficult, since the truth is so painfully obvious:

 • If you can afford to pay, you must pay. The government cannot and will not help. No one is coming to your rescue.

 • Premiums will rise, and underwriting will become more restrictive.

 • Every policy sold, regardless of size, is a blessing. Sell the need and then get whatever premium commitment you can. The only mandatory concept you must explain is exactly what it means to not buy a policy.

 • Remember, the risk is huge, and that is exactly why the premium is huge. The truth is the size of the premium is irrelevant; premium will always be cheaper than an average claim.

 Kindly and firmly explaining the reality of today’s LTCI market in the sales process is important:

 • Long term care is a big problem that packs a substantial risk. Protection is imperative, yet there are just a limited number of companies willing to provide this vital product.

 • Health can be an issue when acquiring an LTCI policy. Thus, the younger and sooner a policy is purchased, the better. If health has already turned some corners, there most likely will be difficulty in getting coverage. (Everyone needs to know what happens when they procrastinate in buying LTCI!)

 • The application process can be lengthy, and extended medical underwriting may appear intrusive. This coverage is not easy to obtain, so be prepared to cooperate and even embrace the process. Good field underwriting is crucial. Your clients must understand that nothing will slip through the underwriting process. The absolute medical truth is their only hope.

 • Regardless of how hard your client has worked to put a retirement plan in place, an LTCI firewall is critical to its survival—no matter how hard we may have to work at getting this protection in place. Never forget to explain the truth about guaranteed renewable. If we can even get coverage in place, premiums may rise in the future. This is health insurance, after all.

Communicating the nature of the risk, the value of the protection, and the reality of the acquisition phase is the only true path to selling LTCI and “water balloon” integrity.

Other than that I have no opinion on the subject. 

Author's Bio
Ronald R. Hagelman Jr., CLTC, CSA, LTCP
CLTC, CSA, LTCP, has been a teacher, cattle rancher, agent, brokerage general agent, corporate consultant and home office executive. As a consultant he has created numerous individual and group insurance products. A nationally recognized motivational speaker, Hagelman has served on the LIMRA, Society of Actuaries, and ILTCI committees. He is past president of the American Association for Long Term Care Insurance and continues to work with LTCI company advisory boards. He remains a contributing "friend" of the SOA LTCI Section Council and the SOA Future of LTCI committee. Hagelman is president of Broadtower Insurance Solutions, a national IMO helping BGAs enhance LTCI production. Hagelman can be reached at Broadtower Insurance Solutions, Inc., 156 N. Solms Rd., New Braunfels, TX 78132. Telephone: 830-620-4066. Email: Website: