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Advisors Embrace Asset-Based LTC Insurance

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Sales of asset-based long-term care insurance policies, those that offer an LTC component attached to a different kind of policy, are growing by leaps and bounds, and they can be easier for advisors to deal with, according to new data from the American Association for Long-Term Care Insurance, released Tuesday.

Jesse Slome, the association’s executive director, said of the data, part of the association’s annual study of new policy sales, “Asset-based or linked products are experiencing growth as they are highly suitable for a very specific consumer. Financial planners and investment professionals who may not like the more complex nature of traditional long-term care insurance policies especially find them easier to sell.”

More than half of new life-plus-LTC policies were sold to individuals 65 and older. Of women in that age group who purchased new policies, 55.7% included the LTC component. Among men in that age group, 51.5% did so. Among individuals ages 55 to 64, the numbers were a bit lower, with men buying that type more often (37.1%) than women (34%). Sales of such policies increased substantially, too, with premiums in 2010 up 79% compared with 2009, and the number of covered lives increasing 83%.

Slome pointed out that such linked policies are often more appealing to consumers because “[o]ne of the features of linked products … is the principle that premiums are not ‘lost’ if the individual never has a qualifying long-term care need. To make coverage meaningful, however,” he added, “one needs to make a significant single premium contribution for each covered life.” In 2010, the initial single premium face amount for 66.2% of such policies sold was $100,000 or more.

In its 2011 Long-Term Care Insurance Sourcebook, the association noted that 95.3% of new life-plus-LTC policies did not have an inflation benefit increase option. That is in contrast to the results in its study of 2010 traditional individual long-term care insurance policy sales, among which 94.5% included some sort of benefit growth option.