Long term care – The blind side of planning
By Tom Riekse Jr.
Football. Whether you love it or hate it, it’s hard to escape this time of year with high school, college and pro seasons in full swing. And with this article, you won’t be able to escape it on ProducersWEB, either.
If you have ever watched HBO’s Hard Knocks, or a similar football documentary, you know the amount of preparation that goes into a game. Football is one of the ultimate team sports, and players are constantly reminded to execute their own role.
Likewise, long term care (LTC) planning has several defined roles for the parties involved. Let’s take a look at those roles and have a little fun comparing the role each stakeholder plays in the LTC protection game to football. In our illustration, we’ll look at the policyholder, the government, the carrier and the advisor. Perhaps this analogy will better help you, the advisor, frame the issue for the client.
1. Policyholder: The left tackle — Michael Lewis’s excellent book, The Blindside, discussed the importance of the left tackle in football, and especially pro football. One missed block can mean a serious or even career-ending injury to a quarterback.
In a similar manner, the person who buys the policy protects their family from the devastating effects of an LTC incident. The best tackles can protect the quarterback from injuries, but they’re not always perfect. The LTC policy is just one part of taking care of the family. Regardless of whether or not one has a policy, the strain on the family is great. While being a left tackle can be a thankless job, it’s also one of the most important.
2. Government: The referees — What would a football game be without referees? Probably entertaining for a while, but things would quickly go downhill as dirty play took over.
Likewise, we have to admit that regulators are a critical part of LTC planning, making sure that everyone is playing by the rules. With LTC, that means getting smarter regulation. Initiatives such as standardized benefit triggers, partnership programs, rate stability rules and speeding better products to markets are good rules. On the other hand, there are plenty of bad rules that LTC has to deal with, such as counterproductive inflation requirements for some partnership plans. 3. Carrier: The general manager — The general manager is responsible for taking care of the players on the team by negotiating their contracts and determining what they will get paid. The problem is, there is a limited amount of money to go around and somebody is not going to be happy. The best at their job keep the team winning over a long period of time and don’t try to do it all at once.
The LTC carrier’s role is also to complete a contract and pay claims when needed. Sometimes, when the economy isn’t performing, they need to make hard choices and increase premiums on in-force policies to maintain the viability of the business and make sure appropriate reserves are in place. Sometimes claims will have to be adjudicated when the claim isn’t legitimate. It’s a difficult, but critical, balancing act.
4. Advisor : The coach — Let’s face it, the most important job in football may be the coach. From Vince Lombardi to Tom Landry, coaches become legends because they can change people’s lives. They work with the left tackle, complain (politely!) to the referees and lobby the general manager for better players.
An advisor who helps a client understand the importance of LTC planning is filling the coaching role in a vital way. The advisor can help make the right decision for that client, press for smarter regulation of LTC insurance, and give the carriers feedback to make their offerings better.
I hope you have enjoyed my football analogy and that it might even help when explaining LTCI to your clients. But on a much more serious note, there is a troubling tie-in between LTC and football that advisors need to be aware of relating to research on the effect that playing the sport has on the brain. Some of the statistics are very sobering, including an increase in the likelihood of neurological diseases such as ALS, Parkinson’s and Alzheimer’s.
Often, advisors discuss LTC by asking about family experience. In light of these findings, it might be appropriate to ask about a family history of playing contact sports as part of that discussion.