PR, Community Relations,
Events, Speakers' Bureau,
Marketing for 55+ Older Adults, Seniors, Boomers, and their Families

Charles Kauffman CEO Atty. Ret.     
5101 River Road     
Bethesda MD 20816     
Phone 301-467-9336       



     The insurance industry has dismally failed to address the unfulfilled demand for Long Term Care insurance policies. A huge market exists for this critical coverage, a market created by: (i) a growing demand to provide long term care services to a rapidly aging population; and, (ii) a need to relieve Federal and State governments of this significant financial burden. The dimming prospects of the CLASS Act should encourage insurance industry giants to exploit this lucrative unmet market with “new” modifications of highly profitable life insurance policies. Approximately 60% of individuals over the age of 65 will need long term care during their lifetimes, but most will not be able to afford it nor pass the physical requirement needed to obtain it. Consequently, most seniors will turn to Medicaid for government assistance.

     Insurance giants such as Genworth, Prudential and MetLife and AARP have not responded creatively to the lack of appeal  of stand-alone Long Term Care products. The few hybrid Long Term Care policies that do exist are based on an “annuity” template which requires allocations from personal savings and investments. However, these hybrids have limited appeal due to stringent life and long term care insurance requirements which exclude eligibility because of preexisting conditions. This, in turn, narrows the market to a very few affluent, eligible seniors. Another sales inhibitor that limits current market appeal is the fact that premiums already paid for stand-alone Long Term Care insurance policies are “lost’ if not used.

      The potential exists for privatization and making the long term care insurance industry profitable through a simple policy innovation and creative marketing to  expand  the insurance pool to include a large base of  younger families.

      1. ADD A “NEW” BENEFIT AT MINIMAL COST. Merely adding a clause to conventional Term, Universal or Whole Life policies allowing prepayments for expenses needed for in-home or institutional Long Term Care. Lifetime advances would be deducted from the final death benefit. The risk to the insurer is minimized since most seniors regard institutional care as a desperate last resort. Statistically the average stay in a nursing home is 18 months at an estimated cost of $60,000 exclusive of medical payments. These factors and the “death benefit” cap reduce an insurer’s risk, resulting in a minimal increase in premiums for he additional coverage. Extending life through long term care might even prolong premium payments.
   2. TARGET A YOUNGER MARKET. Stop using the term “Long Term Care.” Young people simply do not contemplate Long Term Care as an inevitable or foreseeable future need. They see Long Term Care insurance as something for older people. What appeals to them is robust protection for life — for their families — and this added enhancement for only a slightly higher premium. The affordability of significantly more lifetime protection is an attractive selling point. Use “branding” to create customer loyalty.
   3. INSTILL LIFETIME LOYALTY. Facilitate premium payments using a simplified IRA payroll deduction plan, a roll-over with job changes and a COBRA type plan in the event of unemployment. Stability is achieved by maintaining the rates established at the inception of the policy at an early age.

     The insurance industry should wake up and realize that providing this much needed long term coverage is highly profitable, widely popular with consumers and beneficial to the national economy.
Charles Kauffman
November 2011

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