Many of your clients probably have a Traditional Long Term Care (LTC) policy. For some of them, it’s a great product. For others, it has likely been a source of frustration. Part of the problem is that rates on in-force LTC policies are rising across the industry That means that what used to be the smart choice for your clients might not be anymore.
Your clients do not understand the LTC market–nor should they. It’s your job to inform them of options and to help them make the best possible choices. When the available options change—when something happens that could make your clients want to switch to a different policy or change the benefits they can receive through their existing policy—it’s your job to call them up and make sure they know about it.
The issue right now is that the industry as a whole dramatically underpriced long term care policies several years ago. Interest rates have turned out to be lower than expected, consumer behavior has turned out to be different than expected, and so insurers have had to seek regulatory permission for rate increases on existing policies. Some have raised rates already, such as Mutual of Omaha and Genworth Financial. Others, such as Mass Mutual, are leaving the brokerage business—meaning you’ll need to be a captive agent in order to sell these products. Still other carriers are waiting to see what happens, but it’s a safe bet they will all raise rates sooner or later.
The big question for consumers is whether to stay the course and just pay the premium, switch to a different policy, or alter the existing policy so as to drop the premiums lower. Generally, your clients’ best option is likely to be to keep their existing LTC insurance–rates are going up all over, so switching to a different insurer is unlikely to help. But there are going to be exceptions, and the decision to alter an existing policy is complex and depends on a detailed understanding of the terms.
That’s where you come in.
Calling your clients at a time like this is not only the right thing to do, it’s also the best way to demonstrate that you have their backs. So make the call. Ask if they know what their options are.
To confuse matters a little more, remember, Life Insurance with a Long Term Care Rider is one of the fastest growing segments of the insurance industry.