LTC No Longer ‘One- Product-Fits-All’
For many Americans, planning for long-term care used to be a relatively straightforward process — they selected stand-alone, long-term care insurance policies designed to help them pay for the care they will need when they can no longer carry out the activities of daily living.
But in recent years, the cost of LTCi plans has substantially increased, leaving fewer Americans with access to this product. What is alarming, this lack of access is happening at a time when the need to plan for LTC has never been greater.
According to some estimates, 14.5% of the nation’s population is now 65 years old or older, and by 2029, that percentage is expected to hit 20%.
With this graying of the population has come an increased demand for products and services that address the evolving needs of a population that is living longer, and at some point, will require various levels of care.
A New Landscape
Insurance carriers, senior care specialists, financial advisors, lenders, and health and insurance professionals have responded to this demand by moving away from the one-product-fits-all approach of the past to a continuum of solutions that are more modular, more flexible and provide more “situation applications” to buyers. These forward-thinking organizations have essentially re-defined long-term care and created a new industry — the limited and extended care planning industry.
As LECP players seek to meet the evolving needs of older Americans, they have enhanced existing products and offered new solutions. In the LTCi arena, for example, they have introduced products designed to provide more flexibility than stand-alone LTCi policies, making them more attractive to a wider range of consumers.
Among these products are linked-benefit LTC policies, as well as LTC riders. These riders accelerate a policy owner’s life insurance death benefit to cover expenses when the policyholder qualifies as needing extended or long-term care services. Riders also give clients the option to tap into either benefit, providing flexibility to address the inevitability of death and the near-inevitability of long-term health care needs. Whether the owner dies or needs care, they will still get the benefit they paid for.
A growing number of companies are also offering life-combination products. “Our research shows consumers — especially younger consumers — like the idea of purchasing a product that can serve two purposes: mitigate the costs of long-term-care services or offer a death benefit,” said Scott Kallenbach, research director, strategic research, with LIMRA. “Based on the current sales trajectory of these products, we forecast this market to continue to enjoy robust growth.”
Beyond LTCi
Innovations in the LECP industry are not limited only to the product arena. A broad range of services will help Americans with chronic conditions and functional limitations carry on with their daily lives and take advantage of programs designed to help them pay for these services.
For example, some companies are offering a “funding” option (a non-insurance option) for consumers who want to stay in their own homes and gain access to extended-care services but need some liquidity or want to leverage their asset with insurance.
Other companies are providing state-of-the-art solutions in short-term care, claims management, senior housing options and robotics.
All of these innovations have resulted in an industry that is a far cry from yesterday’s senior marketplace. They have produced a new market that offers a comprehensive suite of products and services that allow all Americans to successfully address their long-term and extended-care planning needs.
NAIFA’s New LECP Center
Recognizing this new market and the opportunities it presents, NAIFA recently launched the LECP Center, which empowers insurance professionals to network with providers to share best practices and directly access subject-matter experts, research, training and resources. The center also provides thought leadership that encourages all stakeholders to continue to address the changing needs of the market.
“Over the years, the long-term care industry has heard the call to innovate with more products, expanded services, new research studies, and professional insights and training,” said Carroll Golden, executive director of the center.
“Recognizing the importance of planning and approaching the broader topic of care need options, the LECP Center is designed to encourage advisors to increase their knowledge, grow their practice through education or networking with specialists, and increase profitability by meeting the needs of clients and their families.”
The center provides an opportunity “to come together as an industry to communicate, organize and share information and intelligence so we may continue to address the changing needs of the LTC market. It fills the gap of splintered efforts that are currently proliferating throughout the landscape, and allows stakeholders access to meaningful solutions that truly grow the advisor’s outreach and help their clients,” Golden said.