You may have heard the adage, “the only thing that’s constant in life is change.” This is certainly true for the world of group long-term care insurance, whether it’s carriers moving in or out of the marketplace or their underwriting offers to employers.
For a number of reasons, we’ve seen a dramatic shift in the marketplace over the past 10 years. Many carriers have increased in-force premiums, suspended sales or exited the group LTCI marketplace altogether. Ironically, awareness surrounding the issue of long-term care is at an all-time high. As we experience a demographic shift in America, many employers and their employees are looking at group LTCI as a tool to help protect their lifestyles, 401(k) or retirement savings. Let’s face it, most people buy their insurance at work. Many carriers are recognizing this fact and are making changes or evolving to ensure this benefit’s long-term viability.
Also see: "6 things to understand about long-term care."
There is a new normal when it comes to underwriting offers in the employer-sponsored or group LTCI marketplace. It’s known as simplified issue. The days of carriers providing an employer with a guarantee issue group LTCI underwriting offer are part of the history books. In fact, there is only one “true group” LTCI carrier (Genworth) and they now offer SI plans to new employer groups. Many carriers have recognized the need and opportunity for group LTCI and are now offering “multi-life” programs to employers/employees. These are programs in which employees are offered individual contracts (with underwriting concessions) in a workplace setting. To the employee, they look and feel like a “true group” policy, with group discounts, unisex rates and underwriting concessions. Each covered person or insured, however, is the policyholder instead of the employer being the master policyholder.
Multi-life LTCI is the new group LTCI, but with that said, most advisers/brokers are still culturally conditioned to GI in the group market. Is SI really that bad? When looking at a typical snapshot from a multi-life carrier’s SI application, the number of health questions is abbreviated, and unlike an individual product, SI-eligible applicants do not require a paramedical exam, blood/urine samples, phone interviews or medical records.
Most employees without a chronic medical condition will qualify for coverage. Even employees with current health problems could be eligible, whereas they may not qualify with full medical underwriting if they applied for retail individual coverage. Multi-life policies are also fully portable. Once the policy’s in-force, the employee can continue their coverage throughout their career and well into retirement.
Despite the LTCI industry’s past challenges, the awareness and understanding for long-term care planning is growing. Employers are becoming more interested in offering an LTCI solution, especially as they are exposed to owning the financial wellness and retirement readiness of their employees. The need for long term care is also recognized by the carriers. With market stabilization, several carriers are currently evaluating their entrance into the multi-life space. So if you thought group LTCI was dead, it’s not — it’s just different.
Cain is a principal and national sales leader at LTCI Partners, a Brokerage General Agency specializing in long-term care insurance solutions. Email Steve at email@example.com and visit ltcipartners.com for additional information.
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