Traditional individual long-term care (LTC) policy sales have been declining in recent years, but by no means has the need for a consumer solution faded.
The aging population is swelling (the number of Americans aged 65 and older is expected to increase from 40 million to more than 71 million by 2030 ), and statistics show at least 70% of people over age 65 will require some form of long-term care services at some point in their lives.
With a high percentage of care delivered informally by family members, both planning for how care will be delivered as well as the financing of care is more critical than ever.
While the need for long term care planning is evident, there can be hesitancy on a consumer’s part to purchase a product they may never need. This concern has given way to the rapid momentum of hybrid life/long-term care policies, which have seen dramatic sales growth since the mid-2000s. While these policies have been available since the late 1980s, today they are resonating in the market as they enable consumers to maintain control of their assets, while offering benefits whether or not long-term care is ever needed.
A hybrid life/long-term care policy operates as a universal life insurance policy with long-term care riders, and helps clients leverage assets so they get more for their long-term care dollar. Policyholders can feel confident that they have benefits regardless of whether they should need long-term care because their policy offers the option of: tax-advantaged long-term care benefits, an income tax-free death benefit, or a money back guarantee.
While consumers are attracted to the many benefits of these hybrid policies, such as flexibility, asset control and predictability (many guarantee a set price for coverage, which allows policyholders a way to hedge against premium increases), insurers also see an upside.