Dennis Rinner, Director of Strategic Accounts GoldenCareUSA an Integrity Company
In the last couple years, there has been a major paradigm shift in the extended care product space: The landscape is changing. Agents and consumers (in particular, seniors) are aligned in demanding products that are more consumer and senior friendly. Everyone wants:
1. Less Underwriting: This helps more seniors obtain coverage than alternative long-term-care (LTC) related products.
2. Less Complicated: Seniors and agents complain that LTC alternatives are too confusing and too difficult to explain.
3. Less Costly: Shorter-duration plans can be more flexible, are significantly lower in cost (more affordable than LTC alternatives), but they can still be comprehensive in the amount of coverage clients can select. Further, clients like the fact that both Short-Term Care (STC)/Home Health Care (HHC) are indemnity (cash), not reimbursement, and they have no 90-day doctor certification requirement to be benefit-eligible at claim time. Additional factors illustrate how consumer-friendly these products are and how gate-keeping requirements commonly found in other LTC alternatives are no longer an issue here.
An in-depth look reveals more than a casual glance. Let’s take a closer look at these seven essentials:
- State Availability
- Underwriting
- Unisex Rates
- Discounts
- Included Features (Built-In Choices)
- Add-On Features (Riders)
- Value Proposition
1. STATE AVAILABILITY
Unlike traditional long-term care or asset-based (hybrid, life with LTC) where state availability may be in all 50 states (or in most cases, 49—New York can be a wild card!), STC/HHC products are available in fewer than 40 states. Regardless of the carrier, problematic states include NY, CA, FL, MA, VT, WA, MN, and a few others. Despite ongoing efforts, we continue to encounter resistance from the above-mentioned state Departments of Insurance for a variety of reasons. Our recommendation to agents is to prepare prior to every client interview and review state availability of the carrier(s) you wish to present. The following is not an exhaustive list of carriers marketing STC/HHC, but it will give you a snapshot of availability.
2. UNDERWRITING
In my agent training, I always tell agents that everything starts and stops with this question: Of all the carriers that you can choose from, who will take this case? Back in the day, many agents would only carry one product, perhaps because they were a career agent or they had their “favorite” carrier and felt that was all they needed.
After all, why learn three to four other products if you don’t have to? I am not knocking this approach, but times have changed. Because of underwriting, agents recognize that to compete today, they must have a wider menu of solutions.
Whether agents want to take a holistic approach or just make sure he or she is the go-to resource, this is how one can separate themselves from the competition.
No matter your experience level—new or seasoned pro—it can be challenging to remember all the details and nuances of every underwriting guide. The good news is the STC and HHC products have considerably less underwriting than traditional LTC or hybrids.
STC products have simplified underwriting. Typically, the process involves 11 to 15 yes/no questions. The carrier runs a pharmaceutical check, so unless the results raise red flags that may require a clarification call, these plans have no APS, no PHI, and no face-to-face screening.
Some carriers don’t even report findings to the Medical Insurance Bureau (MIB) or utilize a height/weight requirement. With Home Health Care products, the underwriting net is thrown even wider: only three to four questions, no pharmacy drug check, no APS, no PHI, and no face-to-face regardless of age.
Agents can more easily navigate the underwriting process for both STC and HHC products. In fact, a Non-Insurance solution that has been around nearly 20 years has gained popularity. Home Care Service Membership plans have no Medical underwriting and only two suitability questions. Plans cover non-medical in-home care services, based on a membership model comparable to that of AAA, and pricing varies based on how many Home Care Hours your client wants/needs. Because of its status as a Membership Plan, it is available in all 50 states – including those noted earlier as being problematic.
Despite STC/HHC carriers asking similar underwriting questions, we have developed an agent-use underwriting tool, to be used either at point of sale or in preparation for the interview. This tool is called InstaPIVOT™. We make it available FREE to agents doing business with one of our 250 Nationwide Partners and holds an active appointment with at least one of the carriers being discussed. If not, all the more reason to reach out to us directly. If purchased on a monthly/yearly subscription basis like other quoting/comparison tools, InstaPIVOT™ would cost approximately $600.00 per year. Or appoint with one of our premier carriers featured in this article and you can avoid the cost, obtaining access for FREE.
If not, all the more reason to reach out to us directly. If purchased on a monthly/yearly subscription basis like other quoting/comparison tools, InstaPIVOT™ would cost approximately $600.00 per year. Or appoint with one of our premier carriers featured in this article and you can avoid the cost, obtaining access for FREE
3. UNISEX RATES
One of the real advantages of these STC/HHC products is that rate structures are Unisex. Unlike Traditional LTC that adopted gender-based pricing over a decade ago, due to utilization and claim dollars overwhelmingly being paid to female insureds (compared to their male counterparts). The purpose of this article is not to cover the reason LTC carriers made that decision, but to underscore how advantageous the Unisex rates are on STC/HHC plans.
STC rates are typically “Actual Age”, and HHC Rates are “Attained Age”. Furthermore, the carrier does reserve the right to raise rates (No History of ANY Increases) where in HHC Plans the rates are in 5-year Age bands.
Another clear advantage with STC/HHC plans is the broader age range for insurability. Depending on the plan and carrier, Issue Ages range from age 40 all the way up to age 89. In the HHC space, the lowest I have seen an Issue Age is 45 and the highest is Age 89.
The wider age range on both STC and HHC opens more opportunities to serve the Senior Market. Underwriting and age are big reasons why these products are so popular and is one of the factors contributing to the growth in the popularity of these products – especially for agents who market in the Medicare arena.
4. DISCOUNTS
When comparing STC products to Traditional LTC & Asset Based (Hybrids) and Life Insurance products, it is very common for the LTC/Hybrid/Life carrier to offer multiple rate classifications (like Preferred, Preferred Plus) that provide a client an additional savings. STC and HHC Plans do not offer rate classifications – generally coverage is either issued or it is not. However, what some STC products (not all STC plans) have in common with LTC and Hybrids is a couple’s discount. If Domestic Partners, couples living in the same household both apply and are accepted, the typical discount, each individual will receive a 10% discount. HHC products typically do not offer any additional discounts except for one carrier that is really a STC product but is built on a HHC foundation (more on that in a moment). The only question asked in the underwriting question asked by any of these carriers that would result in an increase in cost, is whether the applicant has smoked in the last 12 months. Smokers will pay more on average an additional 10%, but it could be higher.
5. INCLUDED FEATURES (Built-In Choices)
Plan Design is very simple and straightforward with Short-Term Care Plans. On the next page, you’ll find a chart that shows typical categories and choices. Facility Benefits generally range from $300 to $500 per day. When reviewing Discounts earlier I mentioned that one STC product is built on a HHC foundation versus Facility foundation that all other STC Carriers have. This carrier, though classified as an STC product, has additional discounts beyond just a couple’s discount. Other than Facility vs HHC foundation, the other categories are the same for STC products with slight variations on the length of the benefit period and elimination periods. It should be noted that one STC carrier includes a Hospice benefit as built-in (See following graphic.)
6. ADD-ON FEATURES (Riders)
All STC Plans allow the applicant the option to add additional riders with an additional charge. This list is not an assurance that every STC product has “every” rider listed below. Riders can vary depending on the carrier.
- HHC (daily or weekly
- Facility (the one carrier mentioned has HHC a built-in feature and Facility is the rider)
- 5% Inflation
- Hospital Indemnity
- Adult Day Care
- Return of Premium
HHC Plans have a different set of riders than STC, keep in mind once again that riders may vary from carrier to carrier. Here is a list:
- Ambulance
- DVH (Dental, Vision, Hearing)
- Accidental Death
- Loss of a Limb
- Hospital Indemnity
A word of caution when it comes to riders with both STC and HHC products. It can be tempting to want to add on multiple riders because they each can be very attractive, and you may feel a client would like or need that specific rider. Riders can add up quickly, during the interview you should establish what is “nice to have” versus “need to have” and listen to what the clients’ “real” needs are, their goals and objectives and budget parameters.
7. VALUE PROPOSITION
One of the biggest mistakes agents make while having the conversation with a prospect or client, is when the client says just tell me the Price, the agent ends up caving into this demand and then shares the Price. The Value Proposition is listed as #7, because the previous 6 Essentials play an important role in determining what the actual premium will be. For example, you may touch on each one of these Essentials, just not in the order I covered.
If only Price is given focus, it may turn out the carrier with the lowest price may not be available in the state where the prospect/client lives, or may not qualify based on the underwriting criteria. Nothing is wrong with shopping the STC/HHC market and selecting the carrier that has the very best Price (Pricing can vary dramatically from carrier to carrier). Affordability is one of the key reasons the STC/HHC plans have surged in popularity. Just make sure you consider and follow the 6 Essentials and don’t succumb to leading with Price.
Plan Design and ultimately recommending an STC/HHC plan can be an “art” (practice makes perfect!). It always comes down to one word: “compromise.” In order to achieve a client’s budget expectations, often a compromise is needed – whether related to Monthly Benefit, Benefit Period (does not apply to HHC Plans), Elimination Period, or choice of riders.
Remember, you can design the PERFECT STC/HHC plan. But that PERFECT STC/HHC plan comes with a PERFECT premium, rarely if EVER are you in front of that PERFECT prospect. You don’t have to recommend a plan that is the PERFECT panacea. Some coverage is always better than “sticker shock” that may result in NO coverage. An agent’s success when marketing STC and/or HHC products comes down to 3 things:
- See MORE People
- Help MORE Customers
- Earn More Money
Money earned is always a by-product of the service you render. If you always do what’s best for those you serve, the money will take care of itself. That same concept, phrased a bit differently, is one of my favorite quotes from the legendary Zig Ziglar. I first saw him speak at the young age of 19 and he signed his book “See You At The Top” for me. Zig famously said, “You can get anything you want in Life, if you just help enough other people get what they want in Life.”
70% of Seniors 65 and older and 90% of married couples will need some form of care in their lifetime. 90% have never had a serious conversation about the importance of planning ahead. Covid resulted in 61% of Seniors surveyed said they would “rather die” than go to a Nursing Home. According to an AARP survey, 86% of Seniors want to remain at Home as long as possible.
Your Senior clients need and want these STC/HHC products. If Not You, Who? If Not Now, When? Give your clients Peace of Mind and a Worry-Free Retirement. Make STC/HHC a part of your practice, you and your clients will be glad you did!
Dennis Rinner is a Certified Financial Planner and Director of Strategic Accounts for GoldenCare, an Integrity Company.
Dennis Rinner has more than 35 years’ experience in the financial services industry and, in partnership with GoldenCare conducts marketing activities for multiple LTCI/STCi carriers and serves more than 25,000 contracted agents nationwide. He has trained countless thousands of financial professionals in over 2,500 workshops and has helped establish GoldenCare as a recognized leader in the Extended Care insurance market.
Dennis holds a Bachelor of Science degree in Business with an emphasis on Insurance from San Diego State University. His vast knowledge of the industry and excellent communication skills have taken field-training to a new level. He has become one of the most sought-after speakers on the topic of long-term care and other extended care insurance solutions. Mr. Rinner excels at communicating the need for LTCI planning to a wide variety of audiences, including financial advisors and their clients. His training provides agents with valuable tools to help support their sales success, and the unparalleled agent support, sales training and personal customer service at GoldenCare will help financial advisors grow their business.
Dennis V. Rinner, CFP® Dennis Rinner • 800-842-7799 Ext. 459 • 509.961.9924 • DennisR@goldencareusa.com • goldencaragent.com/dr-bio
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