Asset Based Long Term Care Insurance
There are two major issues that have needed to be addressed to relieve the anxiety of proposed
policyholders, and I believe that so-called asset based policies do both. The first and most important is a guarantee against premium increase. Because these policies are first and foremost life insurance, the premiums are guaranteed not to increase by contract.
The second issue is length of time that the individual can be on claim. Older policies had choices that included unlimited care. However stand-alone LTCi no longer offers this benefit while asset-based policies will pay as long as the insured’s live.
There are several other benefits that asset-based care offers. If you own such a policy and neither spouse needs care during their lifetimes, then the policy will pay the death benefit when the second person named on this survivorship policy dies. If not all the death benefit is used to pay claims, then whatever remains will go directly to the beneficiary tax-free just like other life policies.
As with any life insurance, applicants at younger ages enjoy significant savings in premium costs, as well as having fewer health issues which can make qualifying for these policies easier.
While there are many differences between traditional and asset-based policies, the qualifications to go on claim are generally the same. You must be unable to complete 2 of the 6 “activities of daily living”.
In addition, this type of asset-based coverage can assit you with retirement issues such as living a long life, assisting with wealth transfer, helping with asset accumulation as well as covering LTCi costs.
“People used to buy long-term-care insurance because they were scared. Now it is the policies themselves that are keeping buyers awake at night.” -WSJ 5-1-2015
This quote from the Wall Street Journal summarizes one of the most serious problems that prior purchases of long term care polices have had to deal with, the unscheduled increases in premiums that can make policies unaffordable just when the chance of needing care is most common.
Over the past few years we have seen the number of carriers decrease as major companies like MetLife and Prudential have exited the marketplace leaving fewer carriers with less choice available within these newer policies.