According to a recent LIMRA survey, LTC sales were up 13% over last year – a bright spot in an otherwise flat or declining sales environment. This probably shouldn't come as a surprise, with Baby Boomers turning 65 at a rate of more than 10,000 every single day for the next 18 years. The opportunities for continued growth couldn't be better.
Use the following links to learn more about long term care insurance.
You have worked hard all your life to create a home, assets, and a savings arrangement that will support you in the lifestyle to which you’ve become accustomed. One day, however, everything you’ve saved, all that you have built, may be put at risk by the simplest of everyday challenges – an inability to do those things that are necessary to daily life, such as moving around without assistance, bathing and dressing yourself, eating alone, and so on. Your inability to perform these activities of daily living means that you’ll need to hire someone to help you out.
It may even mean that you’d need to relocate to a facility designed to provide such help. The real question is…Who will be paying for these long term care expenses? Savings? (May be inadequate) Family? (Probably don’t want to be a burden to them) Social Security? (Medicare, the medical care part of Social Security, does not pay for custodial care) Who can help pay for the assistance you require? One answer is to let the long term care coverage that you already have pay for the assistance. What’s that? You say you don’t have long term care protection? Wrong! Everyone in the United States already has long term care coverage. It is called Medicaid (Medi-Cal in California) and pays for these expenses. Relax, you are covered. In case you haven’t checked lately, here’s a quick Medicaid premium calculator: Medicaid “Premium” Calculations Calculation #1: Earnings “Premium”
+ Take your Total Monthly Income - Subtract $2,000 = Equals “Earnings Premium”Calculation #2: Assets "Premium”
+ Take your Total Assets - Subtract your Home and a Car = Equals “Assets Premium”
What is your “premium” total? This is the actual cost of Medicare/Medi-Cal... Don’t you think a long term care insurance policy might be a little less expensive? Since you already have Medicaid coverage (you just haven’t paid the premium yet), isn’t it fair to say that long term care insurance really isn’t about healthcare protection, but rather… Long term care insurance is lifestyle and asset protection insurance. What are the chances that anyone will actually need to pay for long term care expenses? The Brookings Institute says that the average 65 year old person has a 20% chance of having no long term care expenses during their lifetime. The remaining 80% will have some long term care expenses!
- 58% chance of $50,000 or less
- 9% chance of $50-100,000 expense
- 13% chance of $100,000 or more!
Protect your assets. Protect your hard-earned lifestyle with tax-qualified long term care insurance…today.
Most people see the need for protecting their assets and lifestyle against the potential of nursing home or other long duration personal care assistance. Many young adults have friends or family members who have needed extensive, expensive long term care. The majority of adults approaching retirement have a good idea of the likelihood of needing asset protection long term care insurance. The Brookings Institute has determined that 80% of adults age 65 will have some long term care expense in their lifetime.
The Problem …… Most people see the need for protecting their assets and lifestyle against the potential of nursing home or other long duration personal care assistance. Many young adults have friends or family members who have needed extensive, expensive long term care. The majority of adults approaching retirement have a good idea of the likelihood of needing asset protection long term care insurance. The Brookings Institute has determined that 80% of adults age 65 will have some long term care expense in their lifetime. “What if I never need to pay for long term care? Won't I be wasting my money on unnecessary coverage?” For many people this is the real problem with the decision to purchase long term care insurance: It is not clear that the risk of loss is worth the premium cost.
Statistics aside, the premium is viewed as too much to pay for a “nice to have” but not an essential insurance protection. How can an insurance policy be designed to meet this challenge? The answer is the inclusion of inflation protection, nonforfeiture, and premium refund policy provisions: One of the most popular ways to include premium refund protection is the new long term care benefit rider available with some life insurance policies. The death benefit can be paid out to cover long term care expense long before death. Even old life insurance policies may be converted to a combination life / long term care policy with guaranteed benefit payments.
Most of us want to make our purchases at discounted prices. The purchase of Long Term Care insurance is no different; everyone is looking for a bargain. To obtain the coverage best suited to your situation, the following factors should be considered:
- Premium: Should be 7% or less of income.
- Assets: More than 2 years’ nursing home cost.
- Age: Under 85 to be considered for a policy.
- Health: Problems may disqualify coverage.
If these are within range, you should look into long-term care insurance even if you have substantial assets, assets that are adequate to “self-insure” extended nursing home or convalescent care expense. This is true because the long-term care insurance premium, if it includes a refund provision, will be returned to the estate if the benefits are not used, making the cost of long-term care insurance not the premium that was paid, but just the interest that the premium might have earned if it had been invested.
While no two policies will be exactly the same, it is important to compare equivalent benefits, not choose between different policies from different carriers. If you prefer one benefit provision in one design, attempt to include it in all other policy illustrations to make a fair comparison possible. Discounts may be available from associations and/or from insurance companies who offer discounts if two people (may be husband and wife, or could be just friends) apply together. Additional discounts are given to non-smokers, to those in better than average health, and to those who pay annual premiums. Additional cost savings may be found in the National Long Term Care Partnership.
This became law as part of the Deficit Reduction Act of 2005 passed in February 2006. Under this law the state Medicaid plan is combined with private Long Term Care insurance to shelter additional assets from confiscation to pay for extended nursing home or convalescent care expenses. Four states (California, Connecticut, Indiana, and New York) have had such programs for years. Now the remaining states have federal guidelines to follow in designing their own Long Term Care Partnership programs. With programs similar to the Partnership for Long Term Care in California, all areas of the country will soon be able to offer this innovative asset protection program. Some are even going further and using the equity value they’ve built up in their homes to pay for Long Term Care, asset replacement life insurance, and other ways to pass their assets to future generations. A Reverse Mortgage may provide the answer to these needs as well as to those who have discovered that their fixed retirement income is no longer adequate to maintain their desired lifestyle.
Most people, especially those many years away from retirement, like the concept of insuring against long term nursing or custodial care expenses. Their hesitation in actually purchasing the coverage comes from looking at a stream of premiums that, like the Energizer Bunny™, keeps going and going and going. In this case, the applicant might want to consider limiting the number of years that premium is paid. Several insurance companies offer such arrangements on a wide variety of policy benefit designs, with more being added all the time due to the popularity of this policy provision, especially with younger applicants.
The life insurance Long Term Care Rider is perhaps the most effective way to provide a limit to the premiums for long term care insurance protection. It not only is possible to guarantee lifetime coverage with your choice of number of premiums, even a single deposit, but the coverage is guaranteed to be selfcompleting! The life insurance Long Term Care Rider and the policy death benefit will pay at time of long term care claim, or date of death, or a combination, in an amount that is always morethan the premiums paid. In other words, the addition of the Long Term Care Rider allows the life insurance policy to do double-duty as a form of asset protection for either long term care or estate settlement expenses, or both…guaranteed.
Advanced Sales Made Simple
Need a little extra help presenting an LTC case? At Pinney, we want to make every sale and process simple for you and your clients. That's why we create our "Advanced Sales Made Simple" series of tools, resources, guides, and planning concepts. Take a look:
Please contact us to determine the benefits available and the relative costs of each benefit combination. Final premiums are based on underwriting factors including gender, age, health, and family history. The important thing to keep in mind is, if your client qualifies for coverage, the premium is notably less than the required “spend-down” needed to qualify for Medicaid (MediCal) long-term care assistance. Another possible basis for long-term care may be found in existing permanent life insurance policies. Depending on your client's current health, it may be advantageous to exchange an old policy for one that includes the new long-term care rider that allows the death benefit to be paid far in advance of death for long-term care expenses. Protecting assets from the cost of convalescent care - the purpose of long term care insurance. Download our long-term care quote request form and we'll work with you to get your clients the coverage they need.