Selling Long Term Care Insurance

In realizing the American dream, the breadwinners bear great responsibility. For generations, providing for family also meant buying insurance to cover some of life’s most devastating events: among them, major illness and injury, loss of property, and death.

Today, the definition of tragedy is in the eye of the beholder – or rather, the policy holder. The insurance industry has broadened its portfolio to include any number of financial protections: among them, Fido might need a hip replacement. Dementia might send Dad to a nursing home.

Local insurance professionals say supplemental insurance policies are becoming more popular because they provide clients peace of mind at reasonable costs.

“We’re seeing big growth, no question about it,” said Joren Kaiser of Geneva, who has been selling individual and group insurance policies for 19 years. “Our sales are up 20 percent from 2006 to 2007, and 20 percent growth is huge.”

Kaiser is an independent long-term care insurance specialist. He said aging baby boomers were part of the reason long-term care insurance is popular today.

“It’s such a hot product now,” he said. “A lot of businesses feel a responsibility to offer it to their employees as a voluntary benefit.”

Long-term care insurance has been around for about 35 years, he said. Decades ago, there were only about two carriers offering it; today, there are hundreds. Some of the leaders are John Hancock, Gen-worth and MetLife.

“Today it has matured into a full-blown comprehensive coverage you can count on,” he said.

Group health policies and Medicare were designed to pay the costs of skilled care for short-term medical conditions, Kaiser said. People are living longer, but the downside is that they suffer from more chronic conditions. By the time a person reaches the age of 65, chances are one in 2.5 that they will need benefits covered by long-term care insurance.

The insurance covers custodial care for several arrangements, including nursing homes (which provide around-the-clock skilled care); assisted living (an off-site, apartment-like setting where staff provides meals, activities, and monitors medications); home care (in-residence care where certified nurse’s assistants help people with basic functions such as bathing, toileting and eating); and adult day care (a drop-in site similar to a child care center).

The cost of a nursing home is about $6,000 a month, Kaiser said. Most people are forced to spend down all their assets in order to qualify for government assistance, Kaiser said. Long-term care insurance guarantees a level of care that Americans have come to expect in their golden years.

The average age of people buying long-term care insurance is 58, he said. Boomers are motivated buyers because they have witnessed their parents’ ills and financial issues.

“They never dreamed their parents would need long-term care,” Kaiser said. “They figure, ‘If it can happen to them, it can happen to me.’ ”

Some people are not able to afford long-term care insurance, Kaiser said, so Americans always will need the public aid system. The cost of long-term care is based in part on the age of the client when he or she enters the program. Premiums also vary based on medical history and the benefits chosen.

A person age 50 in good health, signing up today for long-term care insurance will pay premiums of about $180 a month, Kaiser said. For someone in good health signing up at age 60, the cost is about $240 a month. There are deep discounts when couples apply together, he said.

“Expense is relative to the amount of money you have,” Kaiser said. “If you want the Cadillac you pay for it. Some people can only afford the Chevette.”

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