Traditional Long-Term Care Insurance May Be Your Apple-a-Day

There’s no doubt we’re excited about the need for long-term care's recent publicity. The public recognizes the problem more and more as baby boomers age—and they’re not the kind of people to sit back and just pray. They’re ready to do something about it. Translation: clients are coming to the surface for air, and financial advisors are in the position to give them what they need—whether that’s traditional LTC or a hybrid policy. Life insurance is the gateway product to rounding out a lifelong financial plan, so it makes sense that a life/LTC hybrid would be attractive to those familiar with the former. But when should an advisor make the push for traditional long-term care insurance? Here’s what you should know (if you don’t already). Comparing traditional long-term care to hybrid policies isn’t like comparing apples to oranges—it’s more like comparing normal apples to candy apples. On one hand, traditional (“pure”) LTC insurance is an apple. It’s the cheapest and it’s practical. In the end, you’re getting what you came to the financial grocery store for: long-term care benefits when you need them. On the other hand is hybrids. “Hybrid” is more of a catch-all term. It represents any number of life insurance plans that have some sort of disability or LTC rider provision. They’re the candy apples—and they can come with a myriad of coatings: a straight sugar shell, a caramel coating, or something less traditional that happens to be trending. Interesting. One thing about hybrids is universal, however: they all detract from the death benefit. So, given the rate of LTC incidence for today’s 65-year-olds, you are still paying for a policy that charges for both a death benefit and an LTC benefit even though you are more than likely to just use the LTC benefit. The life insurance aspect is an extra deal-sweetener (apple-sweetener?)—a “guarantee” the insured (or their heirs, rather) recoup some level of benefits in the unlikely event that they do not use the LTC coverage. For the record, we only sell hybrids that we deem as having worthy LTC riders. If you’re working with us, you’re not getting a “hybrid” with an accelerated death benefit that pays out only under improbable circumstances (e.g., you’re diagnosed with a terminal illness and have 24 hours to live). This article from Wealth Management delves deeper into examples that show why traditional LTCi may be the better choice for a particular client. It’s no wonder the saying goes, “an apple a day” and mentions nothing about candy apples. Of course, every client has different needs and risk profiles, and a good advisor knows that best.