No one really likes to think about needing long-term health care services, but the reality is that each year, an estimated 10 million Americans need some type of long-term care to assist them in performing everyday tasks like eating or bathing1. Long-term care expenses are a key risk to your clients’ retirement plan. If long-term care is needed, it will affect the individual and caregivers financially, physically, and emotionally. Having a plan to address these concerns is critical for easing the burden on your client, their family, and their friends.
Traditional Long-Term Care Insurance
- Allows your client to choose the amount of coverage, how long it lasts, and how long they
must wait before receiving benefits.
- Typically, your client will pay an annual premium for life, although their premium payment
period could be shorter.
- Premiums are not guaranteed, so your client could experience rate increases in the future.
- If your client never needs LTC, there are usually no type of survivor benefits.
Life/LTC Hybrid or Asset-Based LTC
- Includes some life insurance, but the focus is mainly on long-term care. This type of solution is
best for clients who are most concerned about maximizing the LTC benefits, don’t want rising
premiums and are less concerned with a death benefit.
- Premiums can be paid as a single premium, or over time, such as 10 years or longer.
- Premiums are guaranteed, so your client wouldn’t experience a rate increase in the future.
- Usually no exam is required.
- If your client never needs LTC, the owner has a cash out option, or the beneficiaries will receive a death benefit that is no less than the amount of premium paid into the plan.
Life Insurance with a Rider
- Focuses more on death benefit than long-term extended care.
- Offers flexible premiums, as premiums can be paid for life, or shorter durations if desired.
- Do not offer inflation protection; consider starting with a larger pool (or death benefit) to
hedge against future inflation.
- Some products offer guaranteed premiums, other plans offer cash value potential, and some
plans provide both.
- If your client never needs LTC, the death benefit will be passed along to the beneficiary(s).
Other Types of Plans
- Annuities are available that offer a long-term care benefit. They may offer more flexible
- Discounted chronic illness riders are “free” riders available on some types of life insurance
policies. These types of riders are not long-term care insurance, but can offer an accelerated
death benefit, usually in a lump sum if your client is eligible. These riders usually have less
restrictive underwriting requirements and may be a good alternative for clients unable to
qualify for other types of plans.
Is your client ready?