What have you read lately about long-term care insurance?
“Never let the truth get in the way of a good story.” I’m sure Mark Twain wasn’t thinking about long-term care or today’s media when he said this long ago. Today it is very easy to post a piece of news for people to consume. Between traditional TV and radio, an expanded 24/7 news cycle with cable news, there is a lot of information available. The biggest difference today, like in the old days when anyone with a printing press could print whatever he wanted, now he only needs a computer to create a piece of news. It seems that almost everyone has a computer or a smartphone and they are not afraid to use it.
The issue of long-term care has become a major issue with an aging America. By 2030, 1 in 4 Americans will be over the age of 50. By 2050, 1 in 5 Americans will be over the age of 65, according to data from the Centers for Disease Control and Prevention. It seems that once you hit 50, the conversation about long-term care starts to come up. In today’s world, that means you go online and see what information you can find. However, some articles provide misleading or even completely wrong information about long-term care insurance.
We’ve heard the term fake news, but perhaps the best way to define what is written about long-term care is simply “lazy news” or “advocacy news.” Seems like everyone with a computer, Including meHe has an agenda. How much of this is “true” is a matter for debate.
In general, there is more to a story… and the things that are left out are usually very important. Stories about long-term care insurance premium increases are very misleading. They tend to leave out many details. The reporters or “professionals” who write these articles often have an agenda to push the public in one direction or another.
The other thing to remember is that the internet is also “old news” as nothing on the internet is usually deleted. You might find and read something that is old, but that story may have been updated multiple times since the first story was published, making the information you’re reading out of date. You should do more due diligence today to see if you are getting accurate information.
Since the topic of planning for the financial costs and burdens of aging is so important to American families, you need to know the facts. Often the reason articles talk about premium increases is to scare the consumer. Perhaps the writer wants the government to pay for all long term care (not going to happen as too many people require care and budgets are tight as he is trying to care for those with little or no savings). Perhaps the writer wants the consumer to spend large sums of money on a certain type of financial product that he is selling. The consumer must understand the truth, so that he can plan ahead with more peace of mind.
These reported increases are primarily for “legacy products.” These are older plans that were priced long before the interest rate drop and rate stabilization regulations.
Today, all plans are priced with the very low interest rate environment in mind (interest rates have been low in the United States for the past decade). These older plans that had increases were based on a few factors:
Interest rates
Expiration rates (ie how many people cancel their policies. In practice, very few do, but this was not factored into premium pricing on many older plans)
Claims and underwriting experience
These policies are paying huge benefits too. In 2017, more than $9.2 billion in benefits were paid to American families to protect assets and ease the burden of family.
The fact is that these older policies were priced low to begin with and even with increases, they still have exceptional value and tremendous benefits. Nobody likes a raise, but you have to put that raise in perspective. Many of these people I talk to have huge benefits that have been increasing by 5% compounded every year since they had the policy. Many also have unlimited benefits for life. Since they have these huge benefits, many may lower the benefit or factor in inflation to keep the premium the same. As their benefits grow much higher compared to the cost of long-term care, they remain in a prominent position.
Today’s long-term care insurance policies remain highly affordable as people start shopping for plans before they retire. The subscription is more conservative, but since consumers are younger, most people can still find a suitable plan.
Experts say the risks of augmentations are small, but like anything, there’s always the chance of an approved augmentation. However, if you read some of the articles that are published, you will think that the industry is dead and that consumers no longer have any interest in the product.
The fact is that there are still numerous insurance companies that market long-term care insurance. Consumer interest has never been greater. As I speak to other long-term care insurance specialists, like myself, we’ve all noticed a huge increase in both consumer awareness and interest. Consumers are younger, more informed about the risks (often with firsthand experience with an elderly parent or other family member), and we are bombarded with requests for information and quotes.
Consumers seek help from long-term care specialists, as most financial advisors and general insurance agents have limited knowledge and experience with products, underwriting, policy design, benefit options, and the program of federal/state partnership that is available in most states. Therefore, some of these professionals push consumers toward options they are most comfortable with even though they may not be the best and most affordable way to address the costs and burdens of aging.
Long-term care insurance, despite what you read, is very affordable for most people. With regulation and better prices, consumers enjoy greater peace of mind knowing they have a plan they can count on for decades to come, and one that will remain affordable once they retire and age.
Many people can get great coverage for less than $150 a month, some even for less than $100. Premiums are based on your age at the time you get a plan, your health, and the amount of benefits you want. Most of the people I talk to across the country are between the ages of 45 and 60.
A true long-term care specialist will ask you numerous questions about your health, family history, and retirement plans in order to make the right recommendation. Anyone who is willing to give you “quotes” without asking many questions should be avoided.
Long-term care insurance is custom designed. Also, each insurance company has its own underwriting criteria. A true long-term care specialist will represent most or all of the major companies. They will have a thorough understanding of underwriting and policy design. They should have processed a lot of claims, so they have first hand knowledge of how these policies are being used at the time of the claim.
Finally, a true long-term care specialist won’t steer you toward a certain type of policy without spending time talking with you to determine which type of plan fits your specific situation. Working with a long-term care specialist will allow you to get the precise information you are looking for. There are several reference websites for research:
LTC News offers articles and resources: http://www.ltcnews.com
US Department of Health and Human Services: https://longtermcare.acl.gov/
The main concern for most people is that they understand that providing care is difficult. An older spouse cannot be expected to be a caregiver without affecting her own health. Adult children and their own families, careers and responsibilities. Paid care is expensive and depletes savings and affects lifestyle.
For many, long-term care insurance is easy, affordable, with stable income and asset protection. Reduce the burdens that your aging will place on your family. However, talk to a real specialist. There aren’t many long-term care specialists with extensive experience, but I help people all over the country and other people like me too.
This will give you and your family great peace of mind and that is not fake news.
