2012 was a significant year in long-term care insurance offered through the worksite, as companies such as Prudential and Unum decided to stop writing group LTC policies. Currently there is only one major writer of Group LTC insurance, Genworth Financial, and it is being selective on which carriers it is making offers to.
That being said, 2013 should be a year of growth in LTC sales through the worksite. Why? Instead of employers offering group policies to employees, they are offering individual policies sold on a multi-life basis.
In many ways it is beneficial for an employer to have the individual product offering. First, individual contracts are between the employee and the carrier and are fully portable. Employees will get the latest product and policy features available through the carrier without affecting current policyholders. There is no need to worry about issues such as transferring reserves from one carrier to another. And since LTC insurance is not a pre-tax benefit, convenient direct billing is available for the employee.
What’s the downside of individual policies verses group certificates? Generally, the biggest difference is that guaranteed issue underwriting was available on group policies. However, carriers often experienced adverse selection even on large groups — one of the primary reasons the CLASS Act, the government LTC program that was part of PPACA, was never implemented. By insisting on some form of health underwriting, the carriers should be able to offer more attractive rates to eligible employees and make offers to employers who have existing group plans in place.
So what should an employer and benefits adviser look for when considering one of the newer multi-life LTC offerings? Here are some key features:
- Premium discounts compared to what an individual could buy on their own. Although a 5% discount doesn’t seem like much, considering that the average LTC premium is $2,000 per year and premiums are paid annually, it is actually a significant savings over the course of premium payments. Plus, discounts typically carry over after an employee leaves the company.
- A carrier with a strong commitment and experience in LTC insurance. When comparing carriers don’t focus on the lowest premiums (which may indicate future rate hikes) but instead make sure the carrier has a strong track record in LTC and a commitment to the marketplace. Don’t forget to ask about the claim process and experience.
- A strong communication and education plan. Successful LTC offerings include a well-thought-out communication and education program. These campaigns, always conducted off open enrollment cycle, are similar to well done 401(k) education efforts and include on-site meetings, webinars and recorded webinars, microsites, e-mail reminders and other effective tools. The best way to ensure that the campaign is well-thought-out is to partner with a Group LTC specialist — they can often double or triple participation percentages compared to an advisor trying to do it themselves.
- An easy way to enroll for employees and spouses. The real benefits of LTC, including significant premium discounts, happen when both an employee and spouse purchase coverage. This will be especially important when carriers make a move to gender distinct pricing in 2013. Make sure the coverage selected comes with telephonic enrollment capabilities, staffed by salaried and licensed LTC consultants. This consultative approach leads to the best understanding of the type of protection that is being purchased.
Long-term care insurance is one of the most sought out employee benefits. Let your clients know that there are great solutions available for them.
Riekse Jr., CEBS, ChFC is managing principal at LTCI Partners, a brokerage general agency specializing in long-term care insurance. Email him at email@example.com.
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