Editor’s note: Jesse Slome, the Los Angeles-based executive director of both the American Association for Long-Term Care Insurance (AALTCI) and the American Association for Critical Illness Insurance (AACII), graciously took a few moments recently to offer Life Insurance Selling his viewpoints on the anticipated 2010 sales environment for both the long-term care insurance and the critical illness insurance markets. Slome, who founded AALTCI in 1998 and AACII in summer 2009, is via the producer-focused associations dedicated to promoting the importance of planning for long-term care and critical illness needs.
LTCI Outlook:
The coming year will be a mixed bag for long-term care insurance sales. Several key factors will likely impact the industry, the most significant being the final health care reform legislation (still) being hammered out in Congress.
At this point [early November], it is unclear whether final legislation will include the Community Living Services and Support (CLASS) Act provisions establishing a federal long-term care insurance plan. If CLASS passes, it will change the landscape for LTCI marketing and sales. Some predict it will be the start of the long-awaited boom. Others believe it will impede sales, giving consumers one more reason to delay purchasing. To gauge which way the winds will blow, watch how the consumer media plays up the story.
If CLASS is not included in health care reform, there will be some pockets of significant opportunity for those sufficiently focused to capitalize. The change in tax law affecting linked LTCI products (annuities in particular) will garner some media attention. Watch for the entry of larger annuity companies who don’t market traditional LTCI.
I also suspect we will see a continued growth in the number of LTC insurance specialists. Brokers who find it too cumbersome to learn the ins and outs of LTC products and health underwriting will find it increasingly advantageous to partner rather than lose sales to the growing Internet presence of competing brokers.
Finally, the wild card is the Partnership. The LTC Partnership remains the single greatest opportunity to expand sales to middle-income Americans. While more states will offer Partnership LTC policies in 2010, the marketing necessary to achieve the desired market penetration is still nebulous. Until consumers fully understand the benefits of Partnership LTCI, it is unlikely that the significant growth of sales will follow.
Our focus will continue to be addressing the consumer misperceptions that LTCI is expensive. Those who focus on a message of affordability will likely be successful in capitalizing on the new economic realities shaping consumers’ purchasing patterns.
CI Outlook:
Will health reform finally launch critical illness insurance sales? Critical illness insurance continues to enjoy significant sales in Britain, Canada, Southeast Asia — even Israel. U.S. sales have been lackluster at best.
But two factors could change that. First, health care reform will create an opportunity for every American to focus on their health insurance coverage. It will provide insurance professionals with abundant opportunities to bring up gaps in coverage. Consumers clearly understand the risk of having a major critical illness (cancer, heart attack or stroke). What they lack is an awareness of available solutions to the financial devastation created by such a condition. Moreover, critical illness insurance can be affordable and sales in the voluntary marketplace have already proven acceptance of low levels of protection.
Growth in the coming year will come on two fronts: First, the greatest growth will come in the individual marketplace as more insurance professionals look for ways to augment declining sales of other products. In addition, worksite sales will continue to grow as employers and employees alike recognize the implication of high-deductible health plans.
Finally, watch for more insurers to enter the market with CI products or with linked-benefit CI options. That will be the sign that market growth is poised to explode. This is the market to watch in 2010 for signs of what’s ahead in the years to come.