NCOIL Comment Letter I: Consumer Disclosure Law

The Honorable Ronald Crimm
Vice-Chairman
Life Insurance and Financial Planning Committee
National Conference of Insurance Legislators
385 Jordan Road
Troy, NY 12180

September 7, 2010

On behalf of Life Care Funding Group, I thank you for the opportunity to offer these written comments in support of the Life Insurance Consumer Disclosure Legislative Model currently under development by NCOIL.

Founded in 2007, LCFG is the leading provider of Funding Solutions for Senior Living to the senior housing and long term care industry. Our company specializes in converting the death benefit of an in-force life insurance policy into a long term care benefit to cover the costs of skilled nursing home care, assisted living, home health care, and hospice. We are members of the Assisted Living Federation of America (ALFA) and the American Health Care Association (AHCA).

LCFG focuses on providing seniors information and access to private market financial resources. One resource we have been able to use for their benefit is an in-force life insurance policy. There are millions more seniors in this country today with an in-force life insurance policy than a LTC policy.

The U.S. is experiencing a massive influx of seniors and Baby Boomers hitting the long term care system at the worst possible time from an economic perspective. This economic crisis now entering its third year is translating into less tax dollars for Medicare and Medicaid to pick up the costs of long term care which is forcing more emphasis back on the consumer to cover costs out of their own pocket. Seniors and their families are uninformed and unprepared to handle the costs and navigate the LTC industrial complex. Studies show the majority of people don’t save or plan for LTC until they are hit with a health crisis and the time is now.

We often times encounter seniors with a life insurance policy that they have been carrying for years. They are now in a crisis mode and will most likely lapse the policy because there is little to no cash value and they can no longer afford the premiums. When they reach out to the insurance company for options they are told they have two: pay up or lapse/surrender.

LCFG’s solution is to convert a life insurance policy’s death benefit into a long term care benefit that will help pay the costs of care and/or housing. Our program, called the Assurance Benefit, has helped people pay for the costs of nursing home, assisted living and home based health care. Each family we have helped were owners of a life insurance policy they no longer could afford to keep in force. They were planning to either lapse the policy or surrender it for minimal cash value. After they learned that there were alternative options to realize value for an asset they were prepared to abandon, they quickly acted on our program and were able to move forward securing the best possible long term care for their needs.

It is in the better interest of the senior and their family to monetize the policy through a variety of options, such as in our case converting a death benefit to a long term care benefit, and then applying the maximum private market value of the policy towards their needs. It is a private sector solution that addresses the financial needs of the senior and can also help stressed state budgets by extending the spend down period for a senior before they would go onto Medicaid.

We are living in a time when we must be doing all we can to get as much information as possible into the hands of seniors. I understand insurance companies would rather see someone in their 80’s and in the process of moving towards long term care lapse a policy they have been paying premiums on for 20 years. But, if the policy can be converted into the means to cover the costs of long term care for an extended period, and keep them off of Medicaid that much longer, it is in the best interest of the insured and their home state. People need to be informed of their options even if that means entities such as insurance companies are compelled to give the consumer information that is not in the best interest of their profit margins.

Our belief is that the consumer is best served by making informed decisions based on access to all available information. When a senior and their family is informed that an asset they are about to throw away has unrealized value for them, and by converting the policy into a long term care benefit they have found a solution to a health care crisis they are confronting, the consumer wins when they are able to access the most appropriate form of long term care and the state wins when a citizen is able to extend their ability to cover the costs of long term care for as long as possible before accessing Medicaid.

I thank you again for this opportunity to provide comments, and look forward to being a resource to this NCOIL’s efforts to ensure the consumer has access to more, and not less, information and options.

Sincerely,


Chris Orestis
President
Life Care Funding Group