selling ancillary products Archives

Unused LTC policies

By Ed Crowe | General Articles | 0 comment | 3 July, 2024 | 0

In many cases, long-term care insurance is an important financial planning tool. LTC policies provide financial assistance for the cost of care for chronic illnesses, disabilities or injuries associated with aging. Policies cover; nursing home care, assisted living facility care, home health aides, adult daycare and more. Although many older adults require long term care, there are some who do not. We will discuss; what happens with unused LTC policies.

Approximately 70% of Americans will need long-term care at some point. Although the level of care and length of time needed varies by individual. The likelihood of a need for long-term care increases with age. The premium for a LTC policy can be difficult to afford for many people especially on a fixed income.

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What happens if you don’t use the policy

If you spend your hard-earned money on a plan and never need it, do you just lose all that money? Is there any value in a LTC policy if you never use it? The answer to that question depends on the type of LTC policy the beneficiary chooses. Expand article logo

Traditional LTC policies

Beneficiaries who opt for a traditional LTC policy can expect payment of the contracted amount if they require long term care. With these policies, if the beneficiary does not require these services, the policy has no value and can end up costing quite a bit.

Those who purchase traditional policies may have a difficult time maintaining coverage due to the rising costs as their age increases. Policies do not usually have a guaranteed premium amount. When this happens, many seniors find themselves unable to afford the policy and end up dropping the coverage.

There are partnership policy options for those who wish to purchase a traditional LTC policy. Partnership policies are a way for policyholders to protect assets if they exhaust long-term care benefits and must apply for Medicaid. Each state has specific requirements for partnership policies and provide protection against inflation.

Hybrid LTC policies

Hybrid LTC policies may be a good alternative to traditional policies. They provide value even if the beneficiary does not require long term care. Hybrid policies may be combined with either a life policy or an annuity. In other words, there is value in this option in different circumstances.

With a hybrid policy, beneficiaries who decide to discontinue coverage may be able to leave with some cash. Annuity based plans provide the annuity’s value less the surrender charges. Those who add a return of premium rider could leave with their entire plan cost back. In this scenario, the beneficiary does not lose. If the beneficiary dies without using the policy, their heirs may receive a tax-free death benefit similar to a life insurance policy.

What to consider when purchasing a LTC policy

The premiums for LTC coverage may be expensive, therefore think carefully about your budget when choosing a plan. Age, health, coverage amount, elimination period are a few things that contribute to the cost of coverage. Many plans offer optional features, like inflation protection or a non-forfeiture benefit, that may also be important to consider.

In some situations, there are discounts on coverage. Some examples include; if the enrollee is in good health or if the policy is purchased by a couple.

Information for Agents

We have a number of long term care products available to offer your clients. Options include: traditional as well as fixed annuity & long-term care rider, Life and long term care or chronic illness rider. We also have several, affordable short-term care plans available. To find out more about our products; contact our office at 203-796-5403 or email teal@croweandassociates.com.

Agents who want to join the Crowe team or add a carrier to your contract; click here

The bottom line

By comparing the different coverage options, elimination and benefit periods, as well as costs, beneficiaries can make informed decisions. A licensed insurance agent can also add valuable insights into benefit options and costs.

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Short-Term vs. Long-Term Care Coverage

By Ed Crowe | General Articles | 0 comment | 29 March, 2024 | 0

Short-term vs. long-term care coverage

In this post, we discuss short-term vs long-term care coverage. Most people have heard of long-term care insurance. This coverage pays the cost of care when a beneficiary has a chronic illness, disability, or injury. This coverage also helps individuals who require assistance due to the effects of aging. In general, long-term care insurance helps individuals pay the costs of custodial and personal care. Some people have never heard of short-term care which provides much of the same coverage for a shorter period of time.

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Long-term care insurance

Long-term care insurance provides help paying for custodial care for extended periods of time. The coverage this insurance provides is not provided by either Medicare or other health insurance policies.

Long-term care involves a variety of services designed to meet a person’s health or personal care needs when they can no longer perform everyday activities.

The companies that provide this benefit make money by investing the customer premiums they receive. Due to interest rates going down in recent years, these insurance carriers have lower stream of income. They are also losing revenue due to a rising number of beneficiary claims. This has caused a rise in cost and a lessening of benefits for those who wish to purchase a long-term care plan. Companies have also implemented a more difficult pre-qualification process for those who want to purchase coverage.

For most long-term care policy applications, the cutoff age is 79, while the cutoff age for short-term policies is 89. Long-term care policies have an elimination period, which is a specific number of days that the beneficiary pays for care until the policy starts to pay. A common elimination period for the plans to pay is 90 days.

Home-based care

Many individuals receive long-term care at home by either family members, friends, or neighbors. In most instances, home-based care involves help with “activities of daily living” which include bathing, dressing, eating, taking medications, and supervision for personal safety. This care is sometimes supplemented by paid formal caregivers. The professionals that provide these services include nurses, home health aides, and other professional care givers.

Does Medicare home health care.

Community and residential care

Individuals may receive some long-term care services in their community. There are adult day care services or senior center which may be equipped to provide some degree of care including meals, social activities, personal care, activities or transportation.

Residential facilities: assisted living or nursing homes also provide long -term care. Some facilities provide housing and housekeeping only. Others provide personal care, recreational activities, meals, and medical care.

Short-term care insurance

Short-term care insurance is very similar to long -term care in what it covers, Policies typically cover home care, assisted living, and nursing home care for those who cannot care for themselves. Recovery care is another name for short-term care, because it provides coverage for 12 months or less.

In some instances, short-term care insurance is used to cover gaps in Medicare coverage as a less expensive alternative to long-term care. Short-term care insurance is also a good choice to offset some long-term care expenses before long-term care kicks in.

Some benefits of short-term care insurance

Short-term care insurance does not usually have an elimination period; it generally pays benefits immediately. The cost for short-term insurance is less than log-term because it covers the beneficiary for much less time. Coverage options vary from days up to a year.

It’s easier for beneficiaries to qualify for short-term care insurance, there is no medical exam required. Some companies may ask a few yes-or-no questions. For those who are rejected or cannot afford a long-term care policy, short-term policies offer an alternative.

How to choose a coverage option

Make sure you get quotes from several different insurance companies before you choose one.
In this situation, it is a good idea to enlist the help of a licensed agent to be sure you get a plan that best meets your needs.
Have a budget and understand all the out-of-pocket expenses to be sure the plan is budget friendly.
Read the policy and be sure you understand what is covered and how it is covered.