One of America’s leading providers of long-term care insurance recently re-designed their top-selling product. In some states, the previous version came configured with as many as 8 riders! (See my companion piece: “The Top 10 LTC Riders You Need to Know”.) Chief among their goals during the development of the replacement product was simplification—only carry forward the best-sellers.
The “new & improved” plan which emerged today boasts just 2 riders: Waiver of the Home Care Elimination Period, and Shared Care. Of the former, I feel so strongly about its purchase that an entire article is not even necessary. Let’s just cut to the chase: with all deference to your agent, I’d recommend this nearly every time. Of the latter, couples will have to decide whether Shared Care makes sense for their situation. Let’s begin by examining the varieties one might encounter.
SHARED CARE RATIONALE
This rider belongs to an entire class of features designed to appeal to Couples. Among the most common are special Premium Allowances, Survivorship, Dual Waiver of Premium, and Shared Care itself. It’s been a desire of carriers over the decades to attract married applicants for their better risk profiles. In the case of Shared Care, when properly sold it should reduce the overall premium (see examples below) yet still provide meaningful, comprehensive coverage, thus attracting couples who would’ve otherwise found LTCi out of their price range.
The logic is sound, but by no means waterproof. The only true peace of mind for everyone would be an unlimited benefit period, but that’s unrealistic, so the next best compromise is a benefit period which plays the odds. Of individuals who file a claim, about ½ last less than 1-yr, and the other ½ tend to go long (sometimes very long). No one knows in advance which group they’ll fall into. What are the odds that both partners in a single household will “go long”? Shared Care is the willing compromise that they won’t.
SHARED CARE VARIETIES
Not all carriers offer Shared Care as an option, but of those who do it is frequently one of the most popularly chosen, with take-up rates commonly exceeding 30%. In the abstract, this couples-only benefit refers to the act of sharing one’s available claim dollars with one’s spouse or partner. However, this concept only gets us so far, since insurance companies very quickly began introducing “variations on a theme” in an attempt to out-compete one another.
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