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Life Health > Long-Term Care Planning

Here's How Long-Term Care Planning Is Changing

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What You Need to Know

  • Life-LTC hybrids are still hot.
  • Insurers are putting more focus on how couples share benefits.
  • Caregiver support is becoming an industry in its own right.

Insurers may be treating long-term care risk with a high level of caution.

Investors may still view insurers with large amounts of long-term care risk on their books as potential sources of terrifying radioactive financial contagion.

But advisors know that long-term care risk is coming at their clients, their own parents and other loved ones now, with no respect for insurers’ or investors’ fear.

Christine Benz, Morningstar’s director of personal finance and retirement planning, overcame the terror Wednesday and mentioned long-term care at Morningstar’s annual conference.

“There are not any good answers,” she said, according to an article about the conference by Ginger Szala. “Long-term care insurance is quite troubled.”

Rate Increase Fatigue

One sign of the troubles: More holders of stand-alone long-term care insurance policies are responding to big premium increases by dropping their coverage or cutting coverage levels.

In the past, long-term care insurance policyholders were famous for understanding the value of their policies well and holding on to their benefits with an iron grip.

Only about 1% to 3% of policyholders would respond to big rate increases by ending premium payments and accepting nonforfeiture coverage levels, according to Jesse Slome, director of the American Association for Long-Term Care Insurance.

Today, he said, 10% to 20% respond by cutting off premium payments, and 20% to 30% respond by shifting to lower levels of benefits.

About 50% to 60% of policyholders choose to keep their original policy benefit levels and pay the increased premium, he said.

Companies’ Moves

Some insurers and service providers are still doing what they can to fight the good fight.

Here’s are three ways companies are moving forward.

1. Insurers are still trying to put products in your clients’ hands.

Companies such as Thrivent, Mutual of Omaha and National Guardian Life continue to sell stand-alone long-term care insurance.

Securian Financial and Lincoln Financial recently released updated versions of life-LTC hybrid products.

Securian has unveiled the SecureCare III product, which combines long-term care benefits with a whole life insurance policy.

The whole policy is nonparticipating, meaning that the holder will not get dividends that are based on the policy claims experience. Earlier versions of the SecureCare products were based on universal life policies.

“Changing the chassis helps simplify the product, satisfying a key industry-wide request from financial professionals and consumers alike,” Securian said in the product launch announcement.

The new policy offers policyholders the ability to change their minds and tap the policy value through three return-of-premium options. One, for example, can provide a 100% premium refund for consumers who have met vesting period requirements and cancel their policies.

Consumers who want more LTC benefits can choose a return-of-premium option that limits them to getting the guaranteed cash value of the policy if they cancel it.

Purchasers can also choose whether to pay for the policy with one premium or spread the premium payments over a period ranging from five to 15 years.

The long-term care benefits period duration can range from four years to eight years.

Securian is starting by offering the policy in Florida, New Jersey and states that are part of the Interstate Insurance Product Regulation Commission, aka the “Insurance Compact.”

Lincoln’s new policy, the MoneyGuard Fixed Advantage life insurance policy, is part of the company’s MoneyGuard life-LTC hybrid product line. The new policy combines a long-term care benefits rider with a universal life policy.

One feature is a new benefit transfer rider, which is included in the policy at no extra cost.

Policyholders can use the rider to share MoneyGuard policy benefits with siblings, parents or other non-spouse beneficiaries as well as with spouses or domestic partners.

When two policyholders use the rider to connect their policies, and one policyholder dies, the other can simply collect the other policyholder’s death benefit, or use part or all of the death benefit to buy more policy benefits.

The rider can be used through age 121.

Lincoln noted that it has also improved its digital claims submission system.

2. Companies are improving traditional caregiver support.

Lincoln’s MoneyGuard policies have come with a provision that policyholders can use to pay for informal care five days per week.

The new policy lets policyholders pay relatives, including spouses, for informal care seven days a week.

A health insurer, Anthem, is working with Ianacare, a company that sells caregiver support benefits packages to employers, to show how providing access to caregiver advisors and other support services can improve caregivers’ productivity.

Ianacare’s mobile app and advisors can help a caregiver organize a team to provide informal care for a loved one.

When the company participated in an Anthem pilot program for six weeks, the likelihood that a caregiver would handle most caregiving tasks alone fell by 9.1 percentage points, the likelihood the caregiver would have to take time off from work to provide care fell by 12.5 percentage points, and the likelihood that the caregiver would often feel overwhelmed by caregiving tasks fell by 12.5 percentage points, according to a report on the results commissioned by Anthem and prepared by a team that include representatives from Anthem and HealthCore, a health research project company.

Support for expanding commercial and government respite care benefits, or programs that provide extra home care services or temporary facility-based care when family caregivers take time off from caregiving, appears to be building.

3. Companies are setting up the long-term care services networks of the future.

Many life and health insurers have venture capital arms. The venture capital program managers say they are looking for any startups with ideas for providing care for older people who are frail or who have trouble with the activities of daily living.

The Helper Bees, a company that runs an online long-term care services supermarket, is putting out a request for information from “aging-in-place” solutions providers.

The Helper Bees system can vet providers’ credentials, process insurance claims and collect service quality reports.

The firm is organizing the RFI to expand the number of vendors offering services through its system.

The vendors could provide traditional home health care and homemaker services, remote patient monitoring, mental health services, medication adherence support, legal assistance, transportation or pest management services, The Helper Bees says.

The firm also looking for providers of fall detection and prevention programs, social isolation improvement programs, and advanced elder care technology.

The RFI submission deadline is June 10.

(Photo: Katarzyna Bialasiewicz/iStock)