The Last Word On LTCI...
Ronald R. Hagelman Jr.
May 2014

My grandmother was from rural east Texas, with substantial Indian blood in her background. She taught me many things: tolerance and kindness to strangers, pride in my family, to look for the strength and intrinsic quality of character in others, as well as a passion for cooking and caring for others. Her speech of course reflected her humble and labor-intensive beginnings. I always knew exactly what was meant and what was implied.

One of her favorite constructs involved determining if by adding or subtracting components the new whatever-it-was would work. Did the parts actually fit, or for that matter even belong together? So, frequently the word “gozenta” would present itself in multiple contexts in her conversations. I knew she meant “goes into,” and I relished her choice of invented vocabulary. She also read signs and predicted the future in tea leaves.

We have before us another cautionary tale, one that deserves careful scrutiny. It involves what goes with what and to what extent. The question is large, increasingly complicated, very strategically important, and in many ways defines our future in long term care insurance sales.

There are few who would argue against the idea that we need to be price-sensitive and to customize benefits to fit the customer’s economic circumstance. For the last several years we have been selling less and less benefit, focusing on co-insurance strategies, trying to find benefit structures that reduce costs: shared care benefit reductions, alternate and sometimes innovative inflation benefits, longer elimination periods, and the beginnings of plans that actually pass risk onto the consumer. It’s actually all these new product choices as well as the old standby stand-alone solutions that are creating a serious benefit integration problem.

As we try to save money and more accurately evaluate benefit and risk, we run squarely into the question of what fits with what. How much should be base plan and how much buy-up? Can we layer or stack policies? Can I have some of this and some of that? Since we are insuring this risk at younger and younger ages, can I buy a starter policy now and add to my protection later as my assets and family grow? Is it “one and done,” or do these customers remain in your ticker file? Are they ever scheduled for subsequent risk evaluations?

I realize that most of you carefully read all specimen policy forms before you would represent a particular product. However, I would simply like to advise you to read very carefully two sections of the policy forms, assuming they are both present. First, determine if there is a “coordination of benefit” section, then read the “exclusions and limitations” section. The questions on your mind should be:

 • Can I sell more than one policy with this company? Will both policies pay?

 • Will this policy pay benefits if another company also pays benefits?

 • Does this policy coordinate with other coverages other than long term care? Accelerated death benefit riders? Combo life and annuities?

 • Are the only exclusions government entities—Medicare, Medicaid or disability SSI?

 • Do they coordinate on reimbursement and indemnity?

As the moving parts of our industry proliferate and creative solutions are found to cost-effectively leverage this risk, you must be cautious that you don’t set traps for yourself. The ability to stack, layer and build customized product and benefit solutions both within and between product lines is critical to our long term success. If you do not know exactly how it “gozenta,” you are lost before you begin.

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:

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