The Last Word On LTCI...
"Monday Morning Quarterback"
Ronald R. Hagelman Jr.
March 2018

“I know there were a hundred ways to tell her I loved her It’s so funny how they’re all so clear today.”—Frank Sinatra, 1981

The siren’s call of hindsight is a temptation too great for most mortals. I think perhaps at least in our own minds we have danced around what should now be painfully obvious. We have turned a blind eye because of too much prideful hard work and squandered corporate treasure. Have we simply begun to acquiesce in a growing revisionist sales history? The companies never really gave us the product tools we needed to succeed. The consumers never understood the inescapable urgency of the risk. The underwriters never really granted us the flexibility to help those who came to us in need. Premiums always seemed to be just beyond the reach of those most willing to buy.  In my own humble opinion the  TQ chronic illness risk abrogation aftermath of HIPAA has institutionalized a market based on holistically stubborn, socially elitist, politically incorrect, comically redundant and myopically rigid product assumptions. When do we  finally find the courage to  openly and publicly admit maybe just maybe we got it all wrong from the beginning?

A quick review (at least from this jaded observer) may be in order:

  • We thought this was just another Medicare Supplement policy complete with a neatly outfitted 100 day elimination period where medically supervised skilled care would be followed, as day does night, by universally unwanted  warehoused custodial care complete with green Jell-O and the proverbial unwanted screamer in the next bed. We got it all wrong. In fairness we could not have foreseen the explosion of quality home care services or ALFs where my own Mom’s first meeting was with the chef to discuss her culinary preferences.
  • Persistency, or the lack thereof, has been discussed ad nauseum. We didn’t just miss the side of the barn, it simply never materialized and remains a mirage of wishful thinking. In truth we had every reason to suspect it would behave as all it’s individual accident and health predecessors. We got it really wrong.
  • We had every reason to believe that the long term interest rate environment would remain somewhat irrational, but that the traditional ebb and flow of inflation would at least persist and keep the pot on the boil. We remain wrong for the foreseeable future.
  • We built product designed to extinguish the  maximum measured possibility of a catastrophic risk and we dutifully followed tried and true outlines of the past complete with elimination periods, formulaic co-pays and optional cash indemnities. Spurred on by market competition we loaded on non-insurance benefits such as family caregivers, multiple pools of money and modal premiums, permanently petrifying underpriced product and loading on benefits that have nothing to do with risk.
  • I clearly remember standing around at the first ILTCI Conference lamenting over cocktails about the lack of claims experience. Careful what you wish for! However innocently or courageously we walked into this, the as yet never ending drum beat of large and onerous rate increases has given us all a black eye. Rate stabilization has helped. The elimination of superfluous benefits has helped. But we still  got it wrong for a very long time. Twenty years of sales has given us a world of closed blocks of premium subject to the inevitable pressure of their own slow yet inevitable rate spirals. Make no mistake, the largest and most embarrassing rate increases on existing premium are yet to come and the storm clouds are now approaching just over the horizon. 

Simply wiping the blackboard clean is insufficient. We must hold every sacred premise up to the light and make better decisions about our intentions and how we get there. As an example we have had great success with asset-based combo options. But we must ask ourselves: Why? And does our responsibility stop at the edges of those affluent enough to have their cake and eat it too? We need to consider that maybe it was not just that they had the ability to make wise financial decisions to leverage dollars, but that they were able to move the chronic illness risk to the  end of the payment line and therefore slashed it’s actual cost.

All our futures in long term care insurance must now be guided not by our past success of  a mere 8 million policy owners after 20 years, but by the 54 million we failed to encourage to “do the right thing.” The truth is we have been looking at this from the wrong end of the telescope. It was not how big and simple that was needed—it was how small and customized to the actual circumstance and dimensions of the most likely claim experience!  The corollary truth is that for too long our goal has been to replace as much risk as possible with insurance. The affluent have always done just that and I see no reason for them to stop. Our goal should have been how many can we save from the intrinsic inadequacies of government dependence. How little is needed to maintain the freedom of choice that comes from remaining a private pay patient?

Frankly I’m a little tired of all of us reviewing with great anticipation each “new” product introduction and the first exercise in our minds is to pidgeon hole the new option by which existing product it already looks most like. More and more of the same has me reaching for the Xanax.

“But it’s easy looking at the game the  morning after
Knowing how you’d play it if the chance to play over ever came
But then a Monday morning quarterback never lost a game.”


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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