Long-Term Care Insurance has been a viable planning tool for the past 30 years. The product has taken on many incarnations over the years and those changes have been overwhelmingly positive for the consumer.
Countless people have been able to save assets and maintain their dignity and have expanded their options because of such policies. However… you would think the insurance industry would not have goofed and lost collectively billions of dollars. After all, insurance companies own all the buildings.
Well, it happened.
The problem is the industry miscalculated on the actual claims experience. In other words, there weren’t enough policies sold and the claims paid out were astronomical compared to the premiums taken in.
The industry has lost a boatload of money selling these products.
Because of these losses premiums of existing policies have increased by upwards of 300%. Since the insurance companies were not allowed to single out existing policyholders, the rate increases were across the board.
Consequently, policyholders were dropping policies in droves which only exasperated the problem. The Long-Term Care industry is imploding. Massachusetts has very few companies even offering Long-Term Care insurance anymore. Moreover, the premiums are much more expensive and tougher underwriting makes those policies more difficult to qualify.
Out of the rubble, a solution, out of chaos comes opportunity.
Enter Life insurance. Life insurance is one of the oldest financial instruments. We all know what valuable uses it has in protecting families, businesses, estates, etc. The industry now has a better handle on claims experience for Long-Term Care and home health care.
Thus was born the concept of accelerating the death benefit for life insurance to pay for Long-Term Care. Gone are the days where the consumer asks “You mean I have to go into a nursing home or need home health care to get any benefit at all? What if I never use my policy, is all that money down the drain?”
The answer now is a profound “NO”! Using the accelerated benefits rider of life insurance now means that the money will eventually come back to the policyholder in the form of Long-Term Care benefits, home health care benefits, access to cash value, and a substantial death benefit. These policies are now in the truer sense consumer friendly.