Over the past few years the Long Term Care market has experienced numerous changes. Companies leaving the market altogether while others have increased pricing either by introducing newer products or by going to existing policy holders and increasing their premiums.
All this has created uncertainty. Uncertainty to the future of the way these companies will provide good solutions for a problem that will not go away; uncertainty for our educated clients who want and need a solution to the problem, but are not sure how best to address the issue.
They are asking themselves:
- Do I need it?
- Can I afford it?
- Why should I pay for something that I may never use?
- Will the premiums go up?
- Will my claims be paid?
- Should I self-insure this risk?
These and many other questions are being considered and may hinder the progress of getting a client to move forward with today’s traditional Long Term Care policy offerings.
So what can you do to increase your chances of getting a client to move forward?
Life Insurance and Long Term Care Riders
My suggestion is to consider the newer solutions that combine Life Insurance with a Rider that can be used to pay for care. Many companies now have this offering and it makes sense to many potential clients. Here are some reasons:
- It addresses the Use It or Lose It potential that most traditional policies have.
- The premiums in many of these hybrid contracts are either guaranteed (if Whole Life) or potentially guaranteed in alternate forms.
- Allows for an exit strategy for the client who might have had second thoughts and thereby could surrender the contract for its cash value.
- Potentially allows for Estate Tax benefits if structured correctly by having the policy owned outside the estate, thereby paying down the estate for LTC costs, while reimbursing the Estate/Trust beneficiaries either at time of care claim or at death of the insured.
These products come in different shapes and sizes from various carriers. Look out for more to come as developing solutions for this need is critical. Carriers sell their product now as riders on Whole Life policies where there is a lump sum deposited into the policy. And carriers are providing solutions that the client will pay in regular premiums into a policy and have a portion of the death benefit available for the purpose of claims for health care.
Keep in mind these are not LTC policies but be on the look out for even more newer creative life policies that will potentially create a solution to the LTC Puzzle.