Marketing Schemes Behind Long Term Care Insurance
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UPDATED: Apr 6, 2016
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Like most insurance policies, long term care insurance policies are marketed in a variety of ways. It is marketed by individual agents or at the workplace as an optional employee benefit. Larger employers tend to offer this option, but many say that it’s not a very attractive product for a small employer. Yet, due to a changing economy, industry experts say that the way these policies are being marketed has begun to change.
Bob Scott, a partner with the Advocate Law Group, thinks that there’s an incentive for the insurance companies to sell long term care insurance because they can increase their investment assets. He explained, “They increase their premium flow, particularly the companies that have been issuing this product, tend to be life insurance companies. However, the need for life insurance, the pricing of life insurance and the premium for life insurance have been declining in recent years. There have been all sorts of socioeconomic changes that have diminished the attractiveness of life insurance as a product.”
Infrastructure plays a part
Aside from marketing, Scott thinks that insurers need products like long term insurance to stay afloat. “You have to ask, what are these companies going to do to support their infrastructure? They have very expensive infrastructure. They need to bring in new sources of premiums, otherwise they have to change the way they do business and that’s hard to do in a big entity. Similarly, agents are having difficulty selling more and more life insurance because the need for it has declined. There are changes in the estate tax that are impacting the need for insurance as well, and with dual income families and self-sufficient spouses, it doesn’t serve the very same function.”
It’s clear that insurance companies will have to find other ways to market long term care insurance in the future. Congress has announced that it will be conducting an investigation into insurers’ marketing practices concerning long term insurance from years ago. Whether that investigation will prompt new regulations on how insurers market insurance is yet to be seen.