It’s November, and Long-Term Care Awareness Month is well underway. Thanks to the efforts of organizations such as the American Association of Long-Term Care Insurance (AALTCI) and the LIFE Foundation, not to mention long-term care (LTC) carriers, more advisors and consumers are aware of the need for LTC planning.
In fact, the U.S. Senate even convened an LTC Commission this summer to make recommendations on how to deal with long-term care (or the more awkwardly named “long-term services and supports”) in the country. One critical part of that commission discussed how to finance long-term care. Not surprisingly, the answers split along ideological lines, with some of the commissioners supporting a new entitlement program and others promoting private financing.
Fortunately, once those advisors and policyholders find out what a new policy costs today (which is much higher), they normally are willing to pay the increased premium.
From a plan design perspective, LTC policies no longer offer the popular “lifetime” benefit that was loved by consumers and feared by carriers. The most up-to-date products today allow a purchaser to select a total pool of money, say from $100,000 to $1 million. That pool can be used in the future for care, up to monthly withdrawal limits either expressed on a percentage of the pool basis or a monthly maximum.
In addition, linked policies work as a form of leveraged self-insurance. The policyholder is accessing the premium deposit first, through the acceleration of a benefit rider, before accessing the extension of benefit riders.
What are upcoming trends with these products? Although the current plans are mostly single-premium policies, there are more policies that are multi-pay plans, such as a 10-pay plan, that are becoming available.