Making Long-Term Care Coverage More Affordable

Steve Goss

By Steve C. Goss

Have your long-term care insurance (LTC) premiums increased? Have you received notice that your benefits are changing? Have you been cancelled for missing a premium payment or been late with a payment? These are all excuses for the LTC companies to cancel or modify your policies.

It all reverts back to the low-interestrate environment. The standalone LTC carriers are losing a tremendous amount of money because their investments inside their companies are not growing like they were when interest rates were 6 percent or higher. Interest rates are now 2.5 to 3 percent, and the baby boomers are now the biggest consumers of this LTC care; therefore, the only recourse the LTC companies have is to increase premiums or cancel policies.

Linked Benefits

Linked Benefits, also known as hybrid policies, have come into favor because the stand-alone LTC market is in trouble. Life insurance companies have realized the state of emergency the stand-alone LTC companies are in. As a result, they have built these “hybrid” policies that work similar to a life insurance policy but with an LTC rider that would work like traditional LTC. The premiums for some companies are guaranteed not to increase, and the policy is better suited for individuals who do not like the “use it or lose it” aspect of traditional LTC plans.

John Hancock and other top-tier companies are offering these types of policies and the general public is seriously considering these as viable options for LTC planning.

We at Goss Associates believe these hybrid policies are the best of both worlds. We call them a self-completing plan that provides the insured with benefits for premature death and long-term care. No more increasing premiums and no more use it or lose it.

The policies offer a death benefit should the insured pass prematurely. Plus, if the insured cannot perform at least two of the six activities of daily living, then the LTC rider kicks in with a tax-free LTC benefit to the insured for a determined amount of time.

The six activities of daily living consist of activities related to self-care that everyone must be able to accomplish in order to live an independent life.

1. Eating: The ability to feed yourself without help. This does not refer to preparing meals.

2. Bathing & Hygiene: The ability to bathe yourself and maintain good dental hygiene without help.

3. Dressing: The ability to dress yourself appropriately, lower and upper regions.

4. Grooming: The ability to comb your hair, trim your nails, apply makeup properly, or trim or shave facial hair.

5. Mobility: The ability to move without assistance from a device, such as a walker, wheelchair, or cane; the ability to get in and out of bed without assistance, and stand and sit without assistance.

6. Toileting & Continence: The ability to manage bowel or bladder discharge or use the restroom without physical help.

There also are survivorship policies, which allow spouses to refrain from buying two individual policies in order to share the LTC rider at a reduced rate. This is the same as the multi-policy discount (husband and wife) that is offered by traditional LTC plans.

Timing Is Everything

When is the right time to buy an LTC policy? This age-old question comes up quite frequently. The sooner you buy an LTC-type policy, the better off– protection wise – you will be. The premiums will be lower and the cash inside a universal life hybrid plan will increase for future use if you need it. The peace of mind that this type of planning affords is invaluable.

Because many millennials tend to believe they will never become disabled and will live forever, it is tough to overcome these beliefs in order to present planning options. But rest assured, someone close to them probably has experienced caring for a loved one in need of this type of coverage.

The time to act is now. There are “cognitive” impairments, such as dementia and Alzheimer’s, which are becoming more prevalent in our society. LTC coverage is best purchased before any events leading to the need for care present themselves. Custodial care and facilities can be expensive.

Basic LTC facts:

  1. One out of every two people will need some form of care in their lifetime.
  2. Seventy-five percent of people age 65 or older will need long-term care.
  3. The average daily price for a care facility today is $300/day, $9,000/month or $108,000/year.
  4. The average stay in a long-term care facility is over three years, costing $324,000 or more.

This can be a very uncomfortable subject to discuss, but it is important to have this conversation with your clients as well as your own family. Why should you or your clients shoulder the burden of paying all the expenses when some basic planning now can help defray the costs?


Steven C. Goss is a principal of Goss Associates with offices in Easton and Chestertown, Maryland, and also in Naples, Florida. With his partner, Andrea Holly, RICP, Goss Associates is a full-service life brokerage firm that works directly with clients and trusted advisers and not one company. They have the ability to shop the market to secure the best prices for your clients on financial products. Their focus is on life insurance products and fixed investments only. For information or questions about their life insurance auditing platform, call (888) 811-2592 or visit www.GossAssociates.com.