What Long-Term Care Policies Buy for Your Client

The statistics on long-term care in the United States are staggering.  The burden placed on family and assets can be life-altering should one of your clients suffer a debilitating illness that prevents them from performing daily functions.  While the days of traditional LTC policies are not at an end, there are more products available today that can provide premium stability and more flexible benefits should your client ever have a need for long-term care. 

The numbers: Care is both expensive and common

Over 70% of people aged 60 years and older will require long-term care at some point in their lives!  As people age, their risk of suffering from life-altering illnesses increases.  While some long-term care needs last for less than a year, others may require assistance for the rest of their lives.  The reality is that long-term care needs are very common in the United States.

Let’s look at the costs

With home care costs above $50,000 and nursing home expenses averaging over $100,000 per year, people who do not have sufficient long-term care coverage risk draining their hard-earned assets to pay for their medical bills.  These costs are expected to go up more than 50% over the next 15 years.  Talking to your clients about LTC policies is an essential conversation to have in order to protect their legacy.  

There is also a family burden to consider

In the United States, the expense of long-term care is too much for many people to afford.  Nearly three-quarters of patients are being cared for by a family member.  This places an enormous financial and emotional burden on American families.  An LTC policy alleviates this burden for your client’s family and puts them in control of their own care when the need arises.

When is the right time to talk to your client about LTC?

Many professionals in the industry look at premium price tables when determining the best age for a client to purchase an LTC policy.  Clients in their mid-50s and in reasonable health can see the most value for premiums paid on a traditional LTC policy.  However, cost should not be the only determining factor.  

The truth is, the need for long-term care can arise well before a person nears retirement age.  Being that as an overwhelming majority of clients will require this care during their lives, we could make the argument that the best time to talk about LTC with your client is right now, regardless of their age.

What type of policies should your client consider?

LTC policy options have really come into their own in the past 20 years giving clients more options to better fit their financial and life goals.  Traditional LTC policies are still being sold and offer affordable premiums for the coverage they provide, but newer, hybrid and asset-based LTC options can offer a balance between protection from the cost of care and a financial legacy for your clients’ heirs.  

Traditional Long Term Care Policy

Traditional LTC policies reimburse the client for expenses associated with long-term care needs up to a daily dollar amount specified in the policy.  While the price of the policy can go up over time, generally, a 55-year-old could expect to pay a couple of thousand dollars per year in premiums for a traditional policy that pays them over $70 thousand per year over the course of 3 years of benefits.  There is no death benefit associated with a traditional LTC policy.

Linked-Benefit LTC

Linked-benefit policies can be a terrific value for your client.  They provide the death benefit of a life insurance policy with an extension of LTC benefits.  It is a good fit for people whose main concern is adequate LTC coverage but would like guaranteed premiums and a death benefit larger than the amount they contributed.  

Linked-benefit policies can be paid in one lump sum or put on a payment schedule.  Your client can choose between a reimbursement policy or a cash indemnity policy.  Reimbursement pays for care service costs up to a certain amount once receipts for the care have been submitted.  Indemnity policies offer more financial freedom and do not restrict how you spend your benefits.  Additionally, indemnity policies pay your maximum benefit when you require care.  

There are wonderful linked-benefit products by top insurers such as Nationwide, Securian, Lincoln, and One America.  Contact your Trust Financial team to explore these products in greater detail and see if they might be fit for your clients.

Adding an LTC rider to a life insurance policy

For clients that want to keep their focus on their life insurance and its death benefit, they might want to consider a rider that allows them to access their death benefit to offset the cost of care should the need arise.  This greatly increases the realized value of their policy and gives them flexibility for whatever the future may present.  

The most important thing is to have the conversation

Talking to your clients about long-term care is important.  Helping them understand the risks, the numbers, and the return can go a long way to helping them find a policy that keeps them, and their assets, protected.  Trust Financial Services is committed to helping you learn what you need to know about the many nuanced products in the market today.  Feel free to reach out to learn how modern long-term care policies can benefit your relationship with your client.