Is it Time for Long Term Care Coverage?

Friday, March 07, 2014

By Caroline Harless and Wes Littlejohn, Peachtree Capital Corporation

Risk management is a key step in the financial planning process and protects your assets from being depleted in the event of an accident or decline in health. With proper planning, you can protect your assets and family from unforeseen events. One facet of risk management that many people overlook until it's too late is long-term care insurance.

Know the facts:

  • Currently, 70% of people who are age 65 and older will be unable to complete at least two activities of daily living over his or her lifetime.
  • The average national cost per month for an assisted living facility is $3,300.
  • The average national cost per month for a private room in a nursing facility is $7,000 while a semi-private room is $6,300.
  • Medicare does not currently pay for custodial care. It pays only for skilled care in very limited circumstances.

The long-term care (LTC) marketplace's reputation has been tainted by unstable pricing and carriers exiting the marketplace. Over the past two years, however, insurance companies have developed additional products that offer more stability and options for our clients, depending on their current circumstances and planning objectives. At Peachtree Capital Corporation, our job is to design a personalized solution that possesses flexibility while optimizing your costs/ benefits.

A quick glance of the products:

1. "Traditional"/ Stand Alone LTC

  • "Use it or lose it" policy
  • Annual premium structure
  • Most LTC coverage per dollar of premium
  • Policyholders have experienced substantial premium increases over the years and carriers exiting the market

2. Hybrid or "Linked Benefit" LTC

  • Combination of traditional LTC and life insurance
  • Most commonly funded with a single premium
  • Provides rate stability, principal protection, LTC benefit as well as supplemental life insurance coverage.

3. Life Insurance with LTC rider

  • LTC coverage equal to the death benefit
  • Flexible premium structures
  • Ability to turn LTC benefits "on" and "off" for multiple uses
  • Indemnity LTC rider allows benefits to be paid directly to policy owner

We are encouraged by the marketplace's recent developments, as they provide greater flexibility, higher plan certainty and more consumer-friendly features. We continue to objectively monitor the long-term care landscape for our clients and welcome the opportunity to do the same for you.

Caroline Harless is President of Peachtree Capital Corporation Wes Littlejohn is a Vice President of Peachtree Capital Corporation