Preserve your client’s wealth with long-term care insurance

By Steven Lamb | June 2, 2006 | Last updated on June 2, 2006
4 min read
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    There are two different types of LTC benefit available: cost-recovery benefits and a straight cash benefit.

    The client will pay a lower premium on the cost-recovery benefit, but these policies require the client to submit their bills to the carrier for approval, and the policy will specify which costs are covered and to what extent. For example, if the client requires a wheelchair, the carrier may only cover the cost of the most basic model. Any upgrade costs will come out of the client’s pocket.

    Because LTC benefits are paid out at a time when the client is at their most vulnerable, submitting bills and awaiting repayment may cause undue stress. Long says that since the product is meant to provide security and independence, clients are best served by the unconstrained monthly cash payout, if they can afford the premium. Still, he points out that cost-recovery policies are far better than the alternative of paying all costs out of pocket.

    Long says that 98% of LTC claims last less than three years, yet 80% of people buying these policies are opting for lifetime benefits, incurring higher costs in doing so.

    The short average duration of LTC claims is largely attributable to client lifestyle. Most claimants are seniors, who are now living longer and more active lives. The improved health that comes from that activity has, in general, delayed their need for long-term care. When these clients do eventually require care, they are usually in their final years and pass away within three years of entering long-term care.

    Lifetime benefits can prove vital for younger clients, however, who are more likely to survive a catastrophic injury than an older client. At the same time, lifetime coverage will be less expensive for younger clients, as the carriers can count on many decades of premiums to offset the risk.

    Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

    (06/05/06)

    Steven Lamb

  • Why you should care about eldercare
  • Preserve your client’s wealth with long-term care insurance
  • Marketing to mature clients
  • Three techniques to help protect clients when making a power of attorney
  • The truth about loss of independence: How advisors can help
  • Eldercare: Engaging the softer side
  • More aging assistance: Resources on aging and eldercare Back to Coming of Age mainpage

    There are two different types of LTC benefit available: cost-recovery benefits and a straight cash benefit.

    The client will pay a lower premium on the cost-recovery benefit, but these policies require the client to submit their bills to the carrier for approval, and the policy will specify which costs are covered and to what extent. For example, if the client requires a wheelchair, the carrier may only cover the cost of the most basic model. Any upgrade costs will come out of the client’s pocket.

    Because LTC benefits are paid out at a time when the client is at their most vulnerable, submitting bills and awaiting repayment may cause undue stress. Long says that since the product is meant to provide security and independence, clients are best served by the unconstrained monthly cash payout, if they can afford the premium. Still, he points out that cost-recovery policies are far better than the alternative of paying all costs out of pocket.

    Long says that 98% of LTC claims last less than three years, yet 80% of people buying these policies are opting for lifetime benefits, incurring higher costs in doing so.

    The short average duration of LTC claims is largely attributable to client lifestyle. Most claimants are seniors, who are now living longer and more active lives. The improved health that comes from that activity has, in general, delayed their need for long-term care. When these clients do eventually require care, they are usually in their final years and pass away within three years of entering long-term care.

    Lifetime benefits can prove vital for younger clients, however, who are more likely to survive a catastrophic injury than an older client. At the same time, lifetime coverage will be less expensive for younger clients, as the carriers can count on many decades of premiums to offset the risk.

    Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com

    (06/05/06)