Planning for the long term

The cost of long-term care continues to rise, according to a survey by Genworth. In 2008, the national average annual cost for a private nursing home room was $67,525. Today, that figure totals $87,600. The national average hourly rate for home health aides is now $20 per hour. 

The toll on families with a loved one needing long-term care services is equally high, according to Genworth.2 Sixty-five percent of people caring for a family member missed work because of caregiving responsibilities, ranging from working less and being late or absent to losing jobs or having to change career paths. More than half of primary caregivers (57 percent) say they dipped into their own retirement funds or savings to help pay for the cost of caring for a family member.

With more people living longer and the increased number of aging baby boomers, there’s no question the demand for long-term care services will continue.

Long-term care riders offer a reliable backup plan

Most long-term care riders offer benefits when a person requires supervision due to severe cognitive impairments or when they’re unable to perform at least two activities of daily living (dressing, bathing, eating, etc.). Monthly benefits vary based on where the person receives care.

The most common structure is to draw down the policy’s death benefit using a percentage and/or a dollar amount for a set time period. Typical monthly benefits may look like this:

• Long-term care facility — 6 percent of death benefit
• Assisted living facility — 6 percent of death benefit
• Home health care agency or professional — 4 percent of death benefit
• Adult day care — 4 percent of death benefit

Whole life insurance policies with long-term care benefit riders provide a reliable backup plan for your clients. While the rider isn’t meant to cover all of a person’s long-term care expenses, it does offer a more affordable way to get extra financial protection that can help during challenging times. Some advantages these riders offer your clients include:

• Access to a portion of the life policy’s death benefit to help pay for services needed due to a chronic or sudden illness, serious accident or cognitive impairment.
• Coverage for various long-term care settings and services, including in-home care and assisted living facilities.
• Premiums that can be forgiven while long-term care benefits are being paid under the rider.
• A more affordable way to purchase long-term care coverage.

Selling whole life policies with long-term care riders also offers many advantages to you, including:

• A more simplified underwriting process than the one required for long-term care insurance. Individuals generally answer only a few additional questions once they’ve qualified for life insurance. This means more of your clients are likely to qualify and their policies will go in force more quickly.
• Increased persistency. The long-term care benefit makes the policy more valuable to the policyholder, which can equate to a longer revenue stream for you.

Help your clients prepare for the long term

No one thinks they’ll need long-term care until years from now, but reality paints a different picture. Help your clients plan for the long-term by showing them the advantages of a whole life policy with a long-term care rider.