The Short Evolution Of LongTerm Care Insurance

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The Short Evolution Of Long-Term Care Insurance
Debra C. Newman, CLU, ChFC, LTCP CEO/President New
man Long Term Care 8200 Humboldt Ave South, Suite
218 Bloomington, MN 55378 Metro
952-888-3777 Toll Free 800625-9267 Fax
952-888-5170 www.newmanLTC.com

• THE PORCUPINE MODEL

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In the Beginningcirca 1998 New Regulations
for LTCI
Typical Plan

• Daily Benefit 40 - 100
• Waiting Period 0,20,100
• Maximum Benefit 50,000 or 100,000
• Home Health Care 50
• Inflation None or 5 Compound

Nice Cuddly Hedgehog
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Now Comes The Quills

• Daily Benefits
• Ranges from 50 a day to 500 a day
• Daily vs. Weekly vs. Monthly Benefits
• Waiting Periods
• 0,20,30,45,50,60,90,100,180,365
• B. Definition of Days
• Calendar Days 1 Day 7
• Service Days
• Calendar Days for Diagnosis
• Zero Days for Home Health Care

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More Quills

• 3. Maximum Benefits
• Multiples
• B.
• Multiple Pools
• Unlimited

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More Quills

• Home Health Care
• A.

Percentage of the Daily or Monthly Benefit

• Skilled Home Care / Non-skilled Home Care
• Who Delivers Care

• Agency
• Independent Certified Individual
• Family

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More Quills

• Inflation
• Inflation
• 5 Simple
• 5 Compound
• 2 to 7 depending on CPI
• Daily or Monthly Inflation vs. Maximum Benefit
  Inflation
• Future Purchase Options
• Yearly, 3 Years, At-Age-65

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And Even More Quills

• 6. Waiver of Premium
• Nursing Home Only
• All Benefits
• After x Days
• For Spouse/Partner Policy
• 7. Assisted Living
• Part of Nursing Home Benefit
• Part of Home Health Care Benefit
• Separate With Its Own Percentages
• Beware of Definitions

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Guess WhatMore Quills

• 8. Restoration of Benefits
• Survivorship Benefit
• Shared Care Benefit
• Extra Cash
• International Coverage
• Accelerated Payment Options
• A. Single Pay
• B. 10-Pay
• C. Age-65
• D. Pay more now and half at age 65

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Now We Have 3 Porcupines
Reimbursement
Indemnity
Disability
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Tax Benefits Regulations

• Federal
• Individuals
• Employers
• Self-Employed
• State
• 29 Different Models
• 50 States With Varying Degrees of NAIC Model
  Adoption

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No Wonder Companies Didnt Know How To Price This
With 100 Accuracy??
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Whats The Current Future State of Long Term
Care Insurance?

• Pricing
• New Products
• Number of Companies
• Claims
• Tax Benefits

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A. Pricing

• Pricing Assumptions
• Lapse Assumption
• Investment Assumption
• Expenses
• Underwriting
• Indemnity vs. Reimbursement
• Reserve Requirements
• Acquisition Costs
• ROI Objective

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New Products Shelf Life Of 2-3 Years

• Number Of Companies Shrinking Due To Uncertainty
  of R.O.I. Uncapped Future Claims

• Navigating The ClaimsMay Be Challenging

E. Increased Tax Benefits
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Summary

• SHOULD YOU PURCHASE IT? Absolutely!
• Big Mistake
• Small Mistake

• Today, thought leaders are uniformly optimistic
  about the future of the long-term care market
  views range from cautious optimism to unqualified
  optimism for a variety of reasons1
• Theres no alternative in sight for the Baby
  Boomers
• Fantasies of early retirement and self-funding
  are gone
• Record budget deficit makes social insurance
  impossible
• Medicaid is in deep trouble
• Consumer awareness has no where to go but up
• Personal responsibility message will be getting
  out
• Pricing has become more rational

1Long-Term Care Insurance Thought Leader Report,
The Forbes Consulting Group, Page 5, November 2003
Porcupines Have A Soft Underbelly