Pat Foley is right in the middle of the action for life insurance policies and annuity contracts that offer long-term care (LTC) benefits.
As president of individual and retirement services at OneAmerica, he works for an Indianapolis-based company that has been offering “hybrid LTC” products, or “asset-based LTC” products, before the hybrid products were cool.
He personally has been involved with efforts to protect consumers against the risk of death, and of outliving income, since the 1980s.
OneAmerica is an active, visible player in the LTC planning market. It’s still expanding distribution networks and web marketing efforts, and supporting the LTC sector’s annual Long-Term Care Awareness Month outreach campaigns.
Here’s a look at five things Foley said he’s seeing in the market for LTC solutions now, drawn from a telephone interview conducted Wednesday.
1. He thinks the predicted increase in interest in LTC planning is definitely here.
“There’s growing interest because of the demographics,” Foley said. “It didn’t really start happening till the last five or six years.”
Foley said he sees growing consumer, and financial professional, awareness that depending on government programs is not a great option.
“We need to get our house in order,” Foley said.
Even today, many agents who live to protect clients against catastrophic LTC risk shudder at the thought of offering consumers products that offer only limited protection against LTC risk.
Those agents are passionate about the idea that paying more to get more protection will be worth the cost for any family hit by a catastrophic LTC need.
Foley said he’s seeing the traditional LTCI specialists offering a limited number of hybrid products that offer strong LTC benefits, long or unlimited LTC benefit premiums, and strong premium guarantees.
3. He sees asset managers and estate planners coming at LTC products from different angles.
Both asset managers and estate planners want to help protect clients from the risk that catastrophic LTC costs might wreck carefully designed arrangements, Foley said.
In many cases, he said, even wealthy clients may have most of their assets tied up in businesses, real estate or other illiquid holdings.
“What if there’s a long-term care event?” Foley asked. “That could force the sale of hard assets.”
But, on average, estate planners tend to work more with life insurance than asset managers do, Foley said.
Because estate planners see more clients go through the life insurance application process, they tend to be comfortable with the life insurance underwriting process than asset managers are, Foley said.
4. He sees financial professionals offering annuity-based products and life-based products to different types of clients.
The details might vary, but, in general, he said, advisors tend to offer life-based hybrids to younger, healthier clients who seem as if they can get through the life insurance underwriting process, and annuity-based hybrids to older clients with more health problems.
5. He sees government agencies trying to design universal LTC programs facing especially difficult challenges.
If a government agency wants to be able to offer coverage at a standard rate to just about everybody, with no underwriting, “it makes it almost impossible to price,” Foley said.
When a program enrolls older working-age adults with health problems in a LTC program, “it’s not a risk, it’s a certainty there’s going to be a need for long-term care,” he said.
When the program managers are trying to project the total LTC costs for enrollees who are almost certain to need care, the managers have to predict both how long the enrollees will live and what kind of care the enrollees are likely to need, Foley said.