Despite declining sales in the overall long term care insurance industry for several years, shared care LTC sales are increasing rapidly, and this is likely to continue.
In the individual LTC market, for instance, limited benefit period LTC insurance sales in 2005 were 15% to 20% more likely to include shared care than in 2004, according to the Tillinghast 2006 Individual LTCi Survey. And, approximately one-third of eligible individual LTC policies issued in 2005 included shared care provisions.
What is the appeal?
Shared care provisions are available to married couples purchasing LTC policies. Under such provisions, when one spouse uses up all of his or her benefits, that spouse can then access the other spouse’s benefits. Also, if one spouse dies, his or her remaining benefit period gets added to the surviving spouse’s coverage limit.
Thus, if each spouse buys a five-year benefit period, including shared care, the two have 10 years of coverage to share between them. If one spouse uses nine years of benefits, one year of benefits is left for the other spouse.
Some carriers have created alternative shared care designs to assure that neither spouse leaves the other without coverage:
In one alternative, each insured must leave at least two years of benefits for his or her spouse. In the above example, benefits for the first spouse would be cut off after eight years so that two years of coverage would be preserved for the other spouse.
Another alternative provides each spouse with his or her own benefit pool, and the shared care provision adds a separate shared benefit pool. In the example above, each spouse would have his or her own five-year benefit period, and a third five-year benefit period would be available on a shared basis. Thus, if one spouse used up nine years of benefits, six years would be left for the other spouse.
Some points to keep in mind: Shared care is not applicable to policies with a lifetime benefit period; a lifetime benefit cannot run out, so the policyholder would have no need to dip into the spouse’s policy. Shared care is also not available when a single person or only one spouse buys coverage since there is no one with which to share coverage.
Shared care is available, however, on limited benefit period policies issued to couples who buy essentially matching coverage.