Fortify financial planning through life insurance with long-term care 

Navigating a complex Long-Term Care (LTC) marketplace remains challenging. By 2030, 24 million Americans will need long-term care (LTC), nearly double the current need. Meanwhile, the supply of caregivers is shrinking rapidly relative to the demand.

LTC is thought of from a health risk vantage point. However, LTC should be viewed from a financial wellness perspective to protect an individual’s assets and finances now and well into retirement.

According to the Genworth 2021 Cost of Care report, the cost of homemaker services has been increasing 10%+ year-over-year since 2017. This same study cites the national average cost of care per individual at just over $108,000. Since traditional health insurance and Medicare typically do not cover LTC expenses, federal and state governments, along with carriers, are interested in finding new ways to address this serious challenge.

To date, the proposed state LTC programs would provide a lifetime maximum benefit of $36,500 creating a coverage gap when the national cost average is more than $108,000 per year. This underscores the financial risk employees may face – and the need for adequate LTC coverage.

In today’s market, group life insurance with LTC – “Life with LTC” – has quickly become one of the most relevant, favorable and affordable offerings. Life with LTC is typically offered on a guaranteed issue basis, meaning no medical underwriting whatsoever. Here are four reasons Life with LTC should be part of a financial portfolio:

• Available to buyers across ages. This solution allows buyers across the age spectrum to gain coverage. The typical buyer for Life with LTC is an individual aged 40–50 (with a slight lean toward male buyers, even though women are more likely to utilize LTC services).
• Market stability. The Life with LTC market offers greater plan and rate stability than traditional LTC. The solution itself is a Life product (LTC coverage from the rider), allowing for growing carrier presence. Some Life with LTC plans provide issue-aged rates, meaning premiums could also be set regardless of future personal health events.
• Cash accumulation and inflation protection. Some Life products offer cash value that can accrue at 2–4%. Employees can also take a loan out on this cash value in the future. Inflation protection allows the benefit to grow over time while accounting for cost of living and cost of care increases. 
• Dual benefit solution. As a combination product, Life with LTC offers employees the ability to utilize the benefit according to their personal circumstances. With Life insurance being the primary product, the plan pays upon death. The LTC rider provides a monthly benefit for LTC expenses/services based on a percentage of the life insurance death benefits (typically 4% or $4,000 per month on a $100,000 Life insurance plan), if the insured cannot perform two or more activities of daily living (eating, bathing, getting dressed, etc.) or if the insured is cognitively impaired.

This is a plan that meets employees where they are – whether they are just starting to establish a formal financial plan or are further along with a diversified portfolio. Life with LTC has earned its place as a mainstay of a holistic financial plan. It creates peace of mind by putting resources in place today to reduce cost and caregiving burden on families in the future.