It’s a very rare occasion these days when a new long-term care insurance product gets introduced, which is why today’s (July 18) official launch of EssentialLTC figures to create some ripples of excitement in an otherwise downtrodden market.
EssentialLTC is a tax-qualified, stand-along long-term care insurance policy, underwritten by National Guardian Life Insurance Company (NGL), an A- (Excellent) A.M. Best rated mutual insurance company, with respected industry expert Jim Glickman’s LifeCare Assurance Company handling all the back-office, underwriting and claims for the new product.
While pre-launch publicity has been minimal with the exception of presentations and information being made available to BGAs, the Sales Guide for EssentialLTC says it isn’t just another stand-alone LTCI product.
“After an extensive look at life insurance combo products with long term care riders, we realized that the products being offered to clients were deficient – carrying lower long term care benefits but with higher premiums. Because long term care insurance is governed by a different set of regulations, we are in the unique position to offer a better choice. EssentialLTC was the natural result,” the guide says in a section titled “What Makes EssentialLTC Distinct.”
Key features of EssentialLTC include:
• Lifetime benefit period option
• Single pay option
• 10 pay option
• Inflation protection (3% or 5% compound, or step rated)
• Special joint rates
While these types of features are being offered less frequently in the industry today, the sales guide says it is EssentialLTC’s “Reverse Combo” feature that propels this new product ahead of existing life insurance combo products. EssentialLTC’s “Reverse Combo” feature adds:
• Limited or full return of premium (with or without claims offset)
• Cash surrender option (available as part of ROP rider, if desired)
When the “Reverse Combo” feature is added to the base product, EssentialLTC becomes an LTCI policy that provides coverage similar to a life insurance policy – offering a return of premium with higher long term care benefits but with lower premiums as compared to most traditional life policies with an LTC rider.
The sales guide says EssentialLTC, while available for ages 40-79, is targeted toward those 50-74 with at least $100,000 in household income. Target prospects likely own life insurance or other conservative investment products, and are ideal prospects for 1035 exchange opportunities.
EssentialLTC, like other LTCI products being sold today, is also not at near the risk of yesterday’s policies for needing future rate increases. While significant rate increases for many blocks of older LTCI policies made a lot of news in the past year, Glickman said during a webinar announcing the new product to BGAs a few weeks back that there is almost no chance of future rate increases for EssentialLTC – and that the Society of Actuaries (SOA) estimates there is less than a 10% chance that LTCI products being sold today will ever need a rate increase.
Carriers said premium hikes on older policies sold a decade or more ago were necessary because back then they had the math wrong. People weren’t expected to live as long, more people were expected to drop their coverage before making claims, the cost of care rose sharply, and carriers didn’t get their anticipated return on investments in a prolonged low interest rate environment. Today, carriers have to get the math right first in order to offer a profitable product.
Coinciding with the July 18 launch, NGL and LifeCare Assurance are ramping up their marketing efforts for consumers and agents alike. The following is from the newly updated EssentialLTC home page:
“We are producing client marketing collateral, providing a consumer website to promote EssentialLTC, offering training and product introduction webinars to provide facts about EssentialLTC, and building a robust agent resource center to give you access to vital information. All of this is designed to help you accomplish your sales goals.”
“Not only do we want to give you the best product to sell, we want you to be excited to sell it. So we put together an incentive package with high first year commissions, an unlimited earning potential, product training, and more.”
Welcome news to “beleagured” market
Jesse Slome, Executive Director of the American Association for Long Term Care Insurance (AALTCI), says any new traditional insurance product and any new insurer is welcome news for a “beleaguered” industry.
“For an industry that has had almost no good news for the past 3 or 4 years, this is good news,” Slome told Insurance Forums. “We will promote it; we will market it.”
But will it sell? Can it make an impact in a slumping market? Slome says agents will look very closely at the pricing, commission, and underwriting when considering it for clients.
“In terms of where the product will have salability, I would say the corporate executive carve-out market will definitely be a niche because of the limited pay provision, and I think some of the optional features will make this product appear far more consumer-friendly than other traditional long-term care insurance products,” Slome said.
Slome notes that at the end of 2015, there were only 110,000 individuals who purchased traditional LTC insurance and that number has been declining for a number of years (700,000 were sold in 2000).
“I don’t know that this product alone can change the downward trend,” Slome said. “The bottom line is this product will earn its own niche in the market. I believe it will help expand the market in the small business closely held executive carve-out arena, but at the end of the day it will likely achieve its sales at the expense of other insurers rather than dramatically growing the overall number of buyers.”
• LTCI specialists: What are your thoughts about this new launch, and what has you excited or skeptical about its potential to make an impact in the market? Please share on this new thread: Rare occasion – A new LTCI product gets launched today
Glickman’s involvement spurs interest
While Slome mentioned there is certainly number of consumers who will only buy an LTCI policy from a name they recognize (Mutual of Omaha, Genworth, etc.), the fact that Jim Glickman and LifeCare Assurance is involved is definitely establishing credibility and generating buzz in the broker community.
“Everybody who knows about this is excited about this product,” says Janet Van Dorn, CLU, CLTC, a long-term care specialist with Berkshire Advisor Resource in Denver, who spoke to Insurance Forums last week. “And because someone like Jim Glickman is behind it, we take it seriously. Jim Glickman is LTC.”
Jim Glickman, FSA, CLU, FLMI, is the president and CEO at LifeCare Assurance Company. His reputation for being perhaps the most stringent health underwriter in the nation at once gives EssentialLTC credibility amongst LTCI pros, but also has some wondering if they’ll be able to find clients who can qualify.
“I’m hoping that his rigorous underwriting won’t be so rigorous that we won’t be able to find any clients,” Jan Dorn said. But she added she is encouraged because this new product has enough of the features which used to be common that had gone away over the years to enable them to do more than just LTC planning.
“I think people will see the value of it. In the past so often we tried to sell the consumer a product that would cover everything. But today we realize that that might make the premium out of reach for the average person,” Van Dorn said. “I think the brokers are beginning to realize that they need to tailor the product they recommend to the client not only in terms of the premium they can afford, but also to their family situation.”
Exact pricing and commission levels have remained a bit of a mystery in the weeks leading up to the launch. Without the ability to actually quote the product, Van Dorn was hesitant to say it’s definitely a game-changer. But the potential is there.
“I’m hoping that this will bring more business to the market – as it should because of all the options that are available,” Van Dorn said. “I have a little bit of a sense that it’s going to be competitive – and why wouldn’t it be? With rigorous underwriting, why wouldn’t it be? And I’d be worried if it was dirt-cheap, but it’s not dirt-cheap.”
• LTCI specialists: What are your thoughts about this new launch, and what has you excited or skeptical about its potential to make an impact in the market? Please share on this new thread: Rare occasion – A new LTCI product gets launched today
• For more information or to apply to become appointed to sell EssentialLTC, visit: https://www.ngl-essentialltc.com/
