Living Benefits 101: Financial Relief from Long Term Care

Your clients and prospects look to you to be an expert as their life insurance needs evolve.  Whether they are adding riders to their existing insurance or purchasing a new or separate policy to address new concerns that arise in their lives, one thing that everyone can agree on is that their family’s financial stability is paramount to your client’s peace of mind.  Too often, a client’s life insurance focus is on how to best buffer the loss of their income in the event of their death.  While a death benefit is crucial to keep the family ship afloat, it does not account for the costly and unfortunate event that they may need assistance due to an accident, a chronic illness, or a decline in mental cognition that renders them dependent on expensive professional care while they are still living.  In this article, let’s discuss some of the possible options to help offset the skyrocketing costs associated with long-term care and how they can provide significant financial relief during the lifetime of your valued client.

The Life Policy that You Don’t Have to Die to Use

The basic premise of a ‘living benefit’ is straight forward in that it refers to money that can be spent during the insured’s lifetime to offset costs associated primarily with long-term care.  These expenses can cripple an otherwise healthy financial statement and leave an estate, and family, in shambles.  

A living benefits policy:

• Is not simply a ‘stand-alone’ LTC policy
• Provides flexibility in when the needed funds are available
• Includes the death benefit of a standard permanent policy
• Provides true peace of mind beyond, and before, the death benefit

There are many tools and products available in the current market that deal directly with the rising insurance need to cover in-life expenses due to illness, malady, and the other unavoidable trappings of old age.  It is incumbent upon the agent to discuss all possibilities with their client concerning not only how they want to set up their families in the event of their death, but also in the event of their living with assistance.  Let’s look at some of the numbers concerning long-term care in the United States today in order to set the tone of necessity.  The economics surrounding this growing need is truly staggering.  

The True Cost of Assisted Life is Measured in Both Financials and Family

In the United States, health-related costs associated with long-term care are high and expected to rise significantly over the coming decade.  With diseases such as Parkinson’s, Alzheimer’s, Dementia, and others trending upward combined with an enormous baby-boomer population entering high-risk ages for these illnesses, the situation is ripe for financial despair for millions of American families.  Here is a breakdown of the financial costs of various long-term care options available today.

When you consider that nearly 52% of adults who reach age 65 will need long-term care in the United States coupled with an average length of stay hovering around 2.5 years it is obvious that this is a financial landmine that any security-minded person would want to avoid.  Perhaps worse than the financial burden associated with professional care, the burden on the millions of individuals who rely on family members to become caregivers is devastating.  Over 27 million Americans act as primary caregivers to family members who are unable to care for themselves.  It is a tireless job that has an immense emotional and financial impact on any family.

The Solution? Living Benefit Policies that Combine LTC and Death Benefits

Hybrid policies combine the need for a death payout with long-term care protection.  In some products, a client can take funds out of their policy to pay for long-term care needs at a slight expense to the death benefit.  These policies typically guarantee a death benefit at some amount despite the decrease associated with reallocating funds for care.  Long-term care stand-alone policies provide greater financial protection but are also considerably more expensive than when combining LTC and Permanent Life together.  

Additionally, the client can pay either in installments or a one-time lump sum.  The barrier that has always existed with a stand-alone LTC policy is that if the client turns out to be one of the lucky people that never require LTC, the money invested in the policy is simply lost.  Hybrid life insurance addresses that problem by allowing the transfer of death benefit funds to be put to an LTC use leaving the investment intact.  

You Are the Champion of your Client’s Well Being

As an advocate for the peace of mind of your client, it is important that you let them know about the risks of possible LTC as it pertains to their family’s financial situation moving forward.  With many options already available and no doubt more coming into the marketplace in the future, look to Trust Financial to keep you on top of emerging trends concerning hybrid policies.  We share your advocacy and our staff can educate and guide you in your journey to provide the most comprehensive client service possible.  Your clients and your success are at the heart of everything that we do.