“I primarily sell disability, critical illness, and long-term care,” Landry told WP. “If I had to quit two and only keep one I’d keep long-term care.”
To explain his rationale for choosing long-term care over the others, Landry discussed the situation in the U.S. and Canada.
In the U.S. the LTC business faced three specific problems that hurt the insurance carrier’s ability to generate profits.
“When the products [LTC] were established and the pricing was set up, interest rates were higher than they are today. Nobody believed we’d see 1% interest rates. So, the insurance company’s not making enough money on their investments.”
The second problem is they assumed the lapse rate would be much higher than the 1 per cent that actually do. Because the 3-5% projection didn’t pan out, they were paying out more than they had coming in.
The third problem was that they allowed an additional trigger which doesn’t exist in Canada. If your doctor said you needed LTC, it made it far easier to claim and the insurance companies were flooded with claims.
Here in Canada we have a far more difficult problem that’s tied to our belief in socialized medicine.
“What’s hurt Canada is the absolute belief because of Medicare that everything is covered. The government will cover me. Everybody believes that and the government has made it abundantly clear ‘we aren’t covering long-term care,’ we don’t cover care that maintains. People don’t understand it. They don’t understand the costs.”
That’s opportunity knocking.
The number of Alzheimer’s patients is expected to explode in the coming years as boomers get older and begin to lose their ability to think and act for themselves. This reality, suggests Montreal-area living benefits specialist Tim Landry, is a big reason why long-term care insurance is going to gain more traction in an industry that so far hasn’t been so keen to get on board.