Many financial professionals opt for the ease of the hybrid life insurance/ long-term care (LTC) sale, but is it always the best fit for the client? There are many planning options available in the LTC marketplace such as hybrid, linked benefit, and stand-alone LTC options. In addition, a client can always elect to self-insure. There’s never one plan that fits all your clients’ needs, so producers should keep an open mind to all the planning options available.
The LTC market and products have changed tremendously over the past few years with some negative press. Insurance carriers continue to deal with low interest rates and have done so for a far longer period than anyone would have expected. Despite these changes, low-lapse rates and high utilization demonstrate the value that coverage provides. Shared plans, potential tax deductions, partnership asset protection, and inflation options are all strong selling features that provide tangible value.
The newest LTC options have product designs that have planned increasing premiums each year. These plans start with a lower premium than the 3% compound level plans, but will keep increasing as the benefits increase each year. The old standard of 5% compound inflation has become dramatically more expensive, but seems to be going by the wayside. The new “norm” of 3% compound inflation is already seeing changes and some carriers have 2%, 4%, 20 year limits on inflation increases, etc. These types of plans have lower carrier reserve requirements, which is good for those concerned with future rate increases. In addition, they allow clients to exercise more control over how their premiums and benefits will increase.
Adding a rider to a life insurance policy can be a low cost way to provide some LTC benefits and can be an excellent “hedge your bets” approach. If your client wants a guaranteed payout for premium dollars paid, hybrid and linked benefit plans could be good options.
However, as the industry changes, so must our mindsets as financial professionals.
Do your clients understand all of their options? Explore Highland’s LTC options and let us help you find the best solution.