Why is the Long-Term Care Insurance Industry Not Reaching the Masses?

Millions of American families need Long-Term Care Insurance to provide them with their choice of quality care at home or a facility. Yet, they erroneously think LTC Insurance is too expensive or have much of their savings tied up without a way to pay for a premium.

Sometimes an insurance agent or advisor has shown them plans that cost too much money. In some cases, they just tell an individual that Long-Term Care Insurance is not for you. Is the industry being snobbish, lazy, or both?

LTC Insurance Can be Affordable for the Masses

Millions of consumers who think they cannot afford Long-Term Care Insurance actually can! So why don't you know this? For at least the last fifteen years, I have considered myself a "senior advocate."  

As a national voice in the reverse mortgage industry, I have been truly blessed to have been accepted into many segments of the national Long-Term Care Insurance industry. These are the noblest group of professionals who genuinely consider their client's needs above all else.

It has always concerned me that the Long-Term Care Insurance industry is geared toward the upper-middle-class and above. Maybe that is why most Long-Term Care Insurance experts agree that their market penetration is about 7%. This, of course, means that 93% of seniors that can protect themselves with this great product don't have it.

How sad, how truly sad.

Before I go further with this article, I must disclose that I am not a licensed insurance agent. Nor by any means do I consider myself a long-term care industry expert. But I do have what I feel is a unique perspective.

I also feel compelled to point out that it is the "industry" I am questioning, not the individual agents (remember, you can hate the game but don't hate the players).

A Unique Perspective from the Outside

In fact, over the last 15 years, I have had the privilege of meeting some of the most incredible professionals, thanks to my "connection" to the Long-Term Care Insurance industry.

So, what is this unique perspective, and exactly how did it come to be?

I am a career mortgage professional. Just last month was my 40th anniversary in the mortgage business. Fifteen years ago, my passion turned to reverse mortgages.

Let me give you a little summary of the reverse mortgage industry.

It is totally misunderstood by the public, the financial advisor world, and the press. All its detractors are relentless in spreading misinformation and half-truths about the product, and the major underwriters in the industry seem to come and go every five years. And our penetration of potential clients is around 6%.

Two Days in Texas Changed My Life

And then it happened, almost exactly twelve years ago. I was invited to speak at an event hosted in Texas by the National Long-Term Care Network (an industry organization of major agencies nationwide that market Long-Term Care Insurance.)

Those two days in Texas literally changed my life.

Now, the National Long-Term Care Network wasn't exactly "excited" to have a speaker, at their national event, on the topic of Reverse Mortgages. But as I said, I had an ace in the hole, and his name was Peter Gelbwaks, Chairman and one of the original founders of the Network. He introduced me to Mr. Terry Truesdell, the President of the Network.

Skilled Professionals with the Same Goal - Helping Families Prepare for Longevity

Thanks to Peter and Terry, I spoke to 100+ of the best of the best in the Long-Term Care insurance world. And it was an extraordinary one-hour session! In that hour, many of us realized that the goal of both our industries was almost exactly the same - to increase the quality of life for seniors, help them "age in place," and help "finance longevity."

I spent two days with these incredible people. And you know what I learned about the Long-Term Care Insurance industry? Do you know what so many of them told me?

They told me that Long-Term Care Insurance is totally misunderstood by the public, the financial advisor world, and the press. They said its detractors are relentless in spreading misinformation and half-truths about the product and the major underwriters in the industry seem to come and go every five years. And their penetration of potential clients is around 7%.

And I remember saying to myself, "am I at a reverse mortgage convention or a Long-Term Care Insurance convention?

And then I remember thinking, hmmm ...

So that brings us to today, twelve years later, and guess what? Nothing has changed in either industry! 

Getting the Truth Out

Why can't these two incredible industries, whose intentions are so very noble, get the correct message out to the masses?

I'm not going to discuss why the reverse mortgage industry has failed to get its message out correctly. That would be boring to the LTC NEWS audience (and very sad for me.)

I will, however, give you my opinion on why a great industry like Long-Term Care Insurance hasn't done a good job communicating to you - the consumer.

And here it goes!

The Long-Term Care Insurance industry doesn't appeal to the masses because they don't show any desire whatsoever to deal with the masses (or at least I do not see it.)

I read so much content from so many great representatives of the Long-Term Care Insurance industry. And this is what I see from many of them:

Rather than letting your money sit in a low-interest CD or annuity, you can place a lump sum, say $50 or $100 thousand or more, into a Single Premium Life Insurance product with a Long-Term Care Insurance rider." They then talk about multiples of coverage based on your investment.

In my opinion, LTC Insurance is truly one of the best and safest products a person could ever own. Doesn't the Long-Term Care Insurance industry realize that the masses don't have tens of thousands or hundreds of thousands lying around in CDs or annuities? 

Here is another very popular quote; "rather than let the money sit in your portfolio, yadda, yadda, yadda …."

The Masses Don't Have Portfolios

How about this one? "Traditional Long-Term Care Insurance is still very much alive, and for X amount of dollars per month, you can have incredible protection!"

The masses, most of us, are worried about inflation, gas prices doubling since last year, increases in their real estate taxes, homeowner's insurance, homeowner's association fees, increased medical costs, and a myriad of other rising costs. 

Too Many People Think LTC Insurance is Only for the Affluent

Most people know they need this coverage; they know they need it badly, but they are scared to "increase" their monthly cash flow. The problem is that most people are not buying what the insurance industry is selling because they think Long-Term Care Insurance is only for the affluent. They get this idea from the industry, financial advisors, and insurance agents.

Now, just for a few minutes, please look at this like I do.

Mortgage Debt Holding Down Many Families

Millions of people age 65 and older still have mortgage debt which is holding them down financially. The average monthly mortgage payment is $1,487.

What if there was an option for the masses to eliminate their monthly mortgage principal and interest payment? How much of a difference could that make in the quality of anyone's retirement years?

Could most people now afford that Long-Term Care Insurance that they thought was "out of their financial reach for years?" In most cases, even after purchasing a Long-Term Care Insurance policy, an individual's monthly debt service still decreased. 

You can have the needed protection and still have more money in your pocket!

If you are an insurance agent, would not a Reverse Mortgage be an option for clients to afford your great product? If you are a consumer - if you eliminated your mortgage payment, would your lifestyle not improve? Would you not have greater peace of mind if you could more easily afford to prepare for the future costs and burdens of aging?

Oh, we're not done yet.

A recent Harvard Joint Center for Housing Studies report states that 46% of senior homeowners still have mortgages! That means 54% don't!

Could these consumers, theoretically, secure a reverse mortgage, choose the "lump sum" option and purchase a single premium Long-Term Care Insurance product? Could they do this without increasing their monthly debt service? The obvious answer is yes!

We are talking about millions of seniors! Millions of consumers who think, "we can't afford Long-Term Care Insurance." One might think of them as "The masses," many of them are you and me. Many need a plan for future long-term health care but think LTC Insurance is too expensive either because they spoke to the wrong insurance agent, or their financial situation limits their cash flow. 

Several Unarguable Facts 

• Longer life spans have totally changed the retirement plans for all but the top 1% of our country.
• Senior home equity now exceeds 10.1 trillion dollars.
• For more than a decade now, every survey and study has revealed that a senior's number one fear is now "outliving their money!" Think about that; they fear running out of money more than death!
• Ten thousand people a day turn age 62 for the next 15 years.

Obviously, not all seniors will have the credit, income, or equity to secure a reverse mortgage. But, in my opinion, millions will. And by the way, there are now "proprietary reverse mortgages" that offer the same protections as the government-insured model, but the minimum age is 55 (not 62), and the maximum mortgage amount is $5 Million. We can help so many people get the protection they need.

Long-Term Care is an Important Topic for Anyone Age 55 and Older

Over the last several decades, breakthroughs in the medical world have been unprecedented! People are living longer than ever before.  

But make no mistake about it, longer life spans are a double-edged sword, a mixed blessing, you may say. And with that mixed blessing comes the almost certainty that you will need care in your lifetime.

Why not have the best of care? Why not have high-quality care in your home, not in the home?

A Challenge

So, I challenge you, you the consumer. I challenge the entire Long-Term Care Insurance industry to open your minds and hearts to this idea to help more American families address the costs and burdens that declining health and longevity bring to both families and finances. 

Let's have the conversation; let's start it right now on LTC NEWS! Send me your thoughts and your questions, and I'll answer them in this column on LTC NEWS and on my TV show - Click here and Ask Mike!

What say you?