Nationwide Financial of Columbus, Ohio, has stopped selling Investcare, the innovative hybrid long-term-care/variable annuity product it introduced a year ago.
Sales were disappointing, said Thomas Houle, the company's manager of long-term-care products. "We had designed this product for stockbrokers who sell variable annuities, as a way for them to get into this market," he said. "But after 12 months, the sales numbers we saw were a fraction of what we had expected."
The decision, made quietly less than two weeks ago, was difficult, he said.
Investcare was designed as a variable annuity with a long-term-care set of benefits. It could be used as a full-blown long-term-care product, without leaching value from the annuity, for as long as needed, or could be used as an annuity without disturbing the long-term-care funding feature.
The demographics seemed compelling, Mr. Houle said. Financial planners do not usually sell traditional lines such as whole or term life, or auto and homeowners or renters insurance. "What we thought was, 'Let's solve the consumer need for long-term-care insurance more like an investment. If they don't need long-term-care, they'll need to have an annuity for retirement,' " he said.
What held potential buyers back is that long-term-care is a "use it or lose it" product, Mr. Houle said. "If you don't need it, then you lose the money you put into it in premiums. That's not very appealing."
Though long-term-care is considered difficult to sell, the market has been growing. A Health Insurance Agents of America study due out next week shows that sales of polices has been growing at an average annual rate of 20% since 1987.
However, hybrid products are still difficult for the customer to understand, said Susan Coronel, long-term-care director at the health insurance agents group.
"All sorts of hybrids are happening, such as long-term-care linked to disability income or to annuities. But these are the exception, rather than the rule. "There's still a steady market for standalone long-term-care, and people are realizing that they need it, just like they need auto or homeowners insurance," Ms. Coronel said.
Nationwide will continue to make Investcare available through Nov. 1, but only to give sales in progress time to close.
But Investcare may be revived someday, Mr. Houle said. "I think it was just ahead of its time," he said.
