LTC Basics

Long Term Care Policies Will Soon Cost More For Women

Long Term Care Policies Will Soon Cost More For Women

The gender gap is about to get a little wider as the formerly egalitarian Long Term Care insurance market starts charging higher prices for women.

While life insurance has long been priced by sex, companies that provide Long Term care insurance (LTCI), mainly used to cover healthcare expenses in old age or for severe illness, have long avoided it. But for the first time this year, they will introduce gender-based pricing, starting with policies from Genworth Financial, Inc. the nations largest seller.

The aim is to reflect actuarial realities – women live longer and prepare ahead more for their futures by buying policies. Genworth says two-thirds of it’s LTCI claim payouts go to female customers, and overall, women account for 57 percent of all policy sales in 2011, according to data from LIMRA, the insurance research and consulting group.

Genworth will introduce gender-specified policy pricing by this spring, if the plan passes regulatory hurdles. That will boost the cost of new policies for women by 20 to 40 percent, depending on the applicant’s age and benefit package, according to the American Association for Long Term care Insurance (AALTCI).

Industry experts expect gender-based pricing will be adopted by other carriers before the end of this year – both for individuals and married couples.

Gender-based pricing is the latest stopgap measure for an industry that already is struggling. The ultra-low interest rate environment has made it difficult for the insurance companies to earn enough on their fixed income portfolios to fund benefits.

Another challenge for insurance companies, ironically, is customer loyalty. Only about 3 percent of policyholders allow their coverage to lapse. It’s a smart consumer move to hold onto policies, but it is costly for carriers, who ultimately wind up paying more claims.

Also, the stressed Medicaid system is the nation’s largest insurer, which puts stress on federal and state budgets. Outside of that, family members are the most common source of care.

So, what can women do to get the lowest rates possible in this new environment?

1. Get Started Now – If you have been thinking of buying Long Term care insurance, this would be a great time to get going. Genworth is applying now for gender-based rate increases to individual state insurance regulators.
2. Apply As A Couple – If you are married, applying as a couple will keep your cost down. Genworth and the rest of the industry apply discounts for couples who apply for coverage together.
3. Ask Questions – To find out more information about this article and to get informed on Long Term Care basics, give me a call.

Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
Email: AG@AbeGlickman.com

“It is better to create a plan 10 years too soon than one day too late.”

Questions or Comments? Give me a call!


Breaking Down The Long Term Care Claim In Numbers

Breaking Down the Long Term Care Claim In Numbers

Now that Long Term Care Insurance has been around for a while, sufficient data has been accumulated so that we have a good grasp on claims. The industry is paying a very large amount of dollars in claims – some $6.6 billion in benefits was paid to about 200,000 individuals in 2011 – all of you should be aware of this information.

Here is an analysis of the more than 160,000 claims that a leading carrier paid by the end of 2011.

In Dollars
• $1.2 million is the largest single claim
• 50% of all claim dollars are paid to claimants with mental disorders including dementia

Benefit Recipients
• 78.7 is the average age of claimants. At age 80, it’s approximately 26% of claims, age 85 it’s about 24% of claims and age 90 it’s 9%
• Youngest claimant is 28; oldest is 103
• 71% of claims have been paid to female claimants
• Married women tend to claim at an earlier age than single women and men

Length of Claims
• 43% of claims last less than one years due to short recoverable illness, a sudden terminal illness or a single use of non-caregiving benefits
• The average length of claims that last more than a year is 4-9 years
• 35% of claims will last more than five years
• Of 100 people, 80 do not transition from where they receive their initial care.

Who Goes On Claim And For What – By Gender And Cause
• Single Women – 38% of all claims
• Married Women – 27% of all claims
• Single Men – 11% of all claims
• Married Men – 24% of all claims
• Women – Dementia, Cancer, Fractures, Stroke
• Men – Dementia, Cancer, Stroke, Parkinson’s

Of all the claims, 59% died while on claims, 30% recovered and 11% exhausted their benefits.

(Source – *AALTCI Source Book)

Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
Email: AG@AbeGlickman.com

“It is better to create a plan 10 years too soon than one day too late.”

Questions or Comments? Give me a call!


It’s Expensive

Would you buy Long Term Care insurance?

“People say the premiums are expensive.” As a Long Term Care insurance Agent, I hear this all the time.
Are they??

I have to expand the question for those who make that statement.

Long Term Care insurance premiums are expensive compared to…what? Compared to the cost of Long Term Care? NO. Long Term Care insurance premiums are a drop in the bucket compared to the cost of the type of care this valuable insurance pays for.

Here’s an example:

A 50-year-old can get a $200 daily benefit to cover today’s cost of care with either a 3-year benefit period or a 5-year benefit period for only $159.14 a month or $224.26 a month respectively. If a spouse is also issued, the premium is reduced 10% for both and paying annually instead of monthly will reduce it an additional 8%. So now were at $1,591 for the 3-years benefit period and $2,242 for the 5-year benefit period.

Sound like a lot? Here’s the value proposition: The premium for the 3-year plan will cost $47,730 over 30 years and the premium for the 5-year plan will cost $67,260. At 5% compound, the daily benefit will be $823.23 in 30 years, which means the benefit pool for the 3-year plan will be $901,433 and the benefit for the 5-year plan will be $1,577,508.

Let me restate this information to be crystal clear:

Buying Long Term Care insurance at the above premium means you would spend 4% to 5% of the potential benefits in 30 years ($47,730 is 5% of $901,433 and $67,260 is 4$ of $1.5 million).

But…were not done yet:

The benefits will continue to grow each year at 5% compound for the rest of your life as long as you haven’t used them all up! At 5% compound, the benefits DOUBLE every 14 years.

I’ve told you what the benefits will be at age 80 for the 50-year-old. Could today’s 50-year-old live to be age 95? According to the Wall Street Journal, one in 10 people who turned age 65 in 2011 will see age 95, so it’s logical to think those odds will be even higher for someone 15 years younger.

At age 95, the 3-year plan will have grown to almost $2 million and the 5-year plan will be sitting at $3 million.
$1,591 x 45 Years = $71,595 Premium vs. $1.8 million in potential Benefits
$2,242 x 45 Years = $100,890 in Premium vs. $3.1 million in potential Benefits

Oh, and let’s see, should I mention that the premium STOPS once you start using the benefits?

But wait – I’m not saying that the premiums can’t increase on a class basis…because yes, they certainly can.

What if you never use it? You’ve made a 4% to 5% mistake…but was it a mistake? Your 4% to 5% mistake bought a peace of mind for you and your family for 30 to 45 years. To me, that’s priceless.

Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
Email: AG@AbeGlickman.com

“It is better to create a plan 10 years too soon than one day too late.”

Questions or Comments? Give me a call!


It’s Expensive

Would you buy Long Term Care insurance?

“People say the premiums are expensive.” As a Long Term Care insurance Agent, I hear this all the time.

Are they??

I have to expand the question for those who make that statement.

Long Term Care insurance premiums are expensive compared to…what? Compared to the cost of Long Term Care? NO. Long Term Care insurance premiums are a drop in the bucket compared to the cost of the type of care this valuable insurance pays for.

Here’s an example:

A 50-year-old can get a $200 daily benefit to cover today’s cost of care with either a 3-year benefit period or a 5-year benefit period for only $159.14 a month or $224.26 a month respectively. If a spouse is also issued, the premium is reduced 10% for both and paying annually instead of monthly will reduce it an additional 8%. So now were at $1,591 for the 3-years benefit period and $2,242 for the 5-year benefit period.

Sound like a lot? Here’s the value proposition: The premium for the 3-year plan will cost $47,730 over 30 years and the premium for the 5-year plan will cost $67,260. At 5% compound, the daily benefit will be $823.23 in 30 years, which means the benefit pool for the 3-year plan will be $901,433 and the benefit for the 5-year plan will be $1,577,508.

Let me restate this information to be crystal clear:
Buying Long Term Care insurance at the above premium means you would spend 4% to 5% of the potential benefits in 30 years ($47,730 is 5% of $901,433 and $67,260 is 4$ of $1.5 million).

But…were not done yet:

The benefits will continue to grow each year at 5% compound for the rest of your life as long as you haven’t used them all up! At 5% compound, the benefits DOUBLE every 14 years.

I’ve told you what the benefits will be at age 80 for the 50-year-old. Could today’s 50-year-old live to be age 95? According to the Wall Street Journal, one in 10 people who turned age 65 in 2011 will see age 95, so it’s logical to think those odds will be even higher for someone 15 years younger.

At age 95, the 3-year plan will have grown to almost $2 million and the 5-year plan will be sitting at $3 million.

$1,591 x 45 Years = $71,595 Premium vs. $1.8 million in potential Benefits
$2,242 x 45 Years = $100,890 in Premium vs. $3.1 million in potential Benefits

Oh, and let’s see, should I mention that the premium STOPS once you start using the benefits?

But wait – I’m not saying that the premiums can’t increase on a class basis…because yes, they certainly can.

What if you never use it? You’ve made a 4% to 5% mistake…but was it a mistake? Your 4% to 5% mistake bought a peace of mind for you and your family for 30 to 45 years. To me, that’s priceless.

Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
Email: AG@AbeGlickman.com

“It is better to create a plan 10 years too soon than one day too late.”

Questions or Comments? Give me a call!


A Guide to Long Term Care Insurance

A Guide to Long Term Care Insurance –
Why All Advisors Need to Understand Long Term Care Policy Provisions

Understanding Long Term care Insurance terminology is often the cause of great confusion and frustration for advisors as well as consumers.

Much of the benefits terminology was derived form the Long Term Disability Industry. Today many Long Term Care policies use simpler and more understandable concepts, but assessing the terms carefully is still important, because terms differ between contracts.

Let’s look at just a few for example:

Elimination (Deductible) Period
The elimination period is basically a deductible. It is a period of time that the policyholder is responsible for all their Long Term Care expenses before the benefits of the policy starts to pay. Typically the Elimination period options are 30, 60, 90, or 180 days. Agents (Advisors) must be able to communicate to consumers how a company defines the Elimination Period which can significantly impact the benefits that are payable at the claim time.

There are typically 2 types of Elimination Periods:

Service Day or Calendar Day
With a Service Day Elimination Period, each day the insured receives a covered service and incurs expenses where a bill is issued, counts as 1 day towards satisfying the Elimination Period. But if home care is needed only 2 or 3 times a week, satisfying a 90 Service Day Elimination Period can take the policyholder large layouts of personal money.

But a Calendar Day Elimination Period does not require that charges be incurred or that services be rendered to satisfy the Elimination Period. As long as the Long Term Care Policy benefit is triggered, and the policyholder needs assistance with at least 2 ADL’s (Activities of Daily Living) each calendar day counts towards satisfying the Elimination Period.

Also, some Long Term Care policies have an Elimination Period called a “1=7” provisions. This means, receiving 1 day of care each week will count as 7 days of care.

It is also important to know that some Long Term Care companies offer a “0” day Elimination Period for an extra premium. This means your policy will pay from day 1 of care!

Now, here is another example of important terms in contracts:

Benefit Period
Also known as the “Maximum Benefit Period,” this represents the number of years that Long Term Care coverage is provided. This period usually range from 2 years to Unlimited Lifetime. The number of years selected is used to define the “total pool of money.” This is the amount available for covered Long Term Care services. Benefit Periods are defined in terms of a Daily Amount ranging from $100 to $500 a day, or a Monthly Benefit from $3,000 to $15,000 a month. It is essential for consumers to have a clear understanding between the two options which will impact their claims.

An example is $200 a day in benefits equals $6,000 a month.

However, if your Long Term Care policy has a Daily Benefit and you incur charges over the $200 a day allotted, this will now become an out-of-pocket expense for you. With a Daily Benefit, you cannot borrow from the $6,000 you have to use. With a monthly Benefit, you can use any amount you want on a daily basis as long as you do not use more than the monthly amount.

Still with me or are you a little confused?

In conclusions, consumers should first be educated about basic policy provisions, how they differ, and how they may impact future claims before choosing a Long Term Care policy. Consumers must choose a knowledgeable Long Term Care specialist capable of providing a clear expiation of these increasing complex and varied policy provisions. This is an essential step when purchasing Long Term Care today.

Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
Email: AG@AbeGlickman.com

“It is better to create a plan 10 years too soon than one day too late.”

Questions or Comments? Give me a call!


LTC Misconceptions

Misconception #1: It won’t happen to me.

LTC By The Numbers

  • One in Two – Americans will need Long-Term Care at some point in their life. Long-Term Care Your Financial Planning Guide 2003
  •  65 year olds – can expect to need an average of 3 years of formal and informal long-term care, and 20% can expect to need more than 5 years. Kemper, Penn State University, Inquiry 2006
  •  21% Of Americans who are either caring for an aging parent now or have had to do so in the past. CBS News Poll (Feb. 07)
  • 50% Proportion of population 85 and older that will require help with activities of daily living. Wall Street Journal Online (Feb. 07)

Misconception #2: I can afford It…

Current Care Costs

  • Nursing Homes – Nationally the average annual cost for a private room in a nursing home is $70,912 ($62,532 semi-private). Average length of stay – 2.6 yrs. Care Scout 2005
  • Home Care – $18-$20 per hour – $52,000 annually @ 8 hrs per day, the average duration for receiving home care is 4.3 years. National Alliance for Caregiving and AARP 2004
  • Assisted Living Facilities – average $34,860 + per year. Average length of stay is approximately 3 years. MetLife Mature Market Survey 2005-

Misconception #3: Medicare Covers LTC

The devils in the details.

The Facts On Medicare… Medicare only covers skilled care – care defined as; services provided by or under the supervision of technical or professional personnel, and:

  • Must be rehabilitative care with ascertainable goals.
  •  Maximum nursing home benefit is 100 days.
  • Maximum nursing home benefit is 100 days.
  • Maximum nursing home benefit is 100 days.
    Misconception #4: Medicaid will pay…
  •  It will pay – after you’ve exhausted most of your assets.
  •  Medicaid limits your choices – usually to a Nursing Home.
  •  I’ll give my money away and get Medicaid – Medicaid has a 60 month look back period on transferred assets. If caught there is a penalty period.
  • You typically must use the facility that Medicaid directs you to use.
  • You may want to stay at home or go to an Assisted Living Facility.
  • Medicaid pays less to facilities than it costs to provide care.
  • Estate Recovery – requires Medicaid to recoup assets from your estate at death.
    Other Popular LTC Misconceptions…

Prenuptial agreements protect my assets from long-term care costs my spouse may incur. – False. Medicaid does not recognize pre nuptial agreements. When you are married the assets of both are considered for “spend down” purposes.

Living Trusts protect my assets from long-term care costs. – False. Irrevocable trusts can protect assets from LTC costs, but are subject to the 60 month look back period. Living Trusts are not designed for long-term care asset protection from Medicaid.


What is Long Term Care

Many people think “Long Term Care” means a nursing home. In fact, Long Term Care includes a wide continuum of care situations. Some people receive Long Term Care in an Assisted Living Facility, others attend an Adult Day Care Facility, and for many, Long Term Care can also be received in your own home.

The level of care depends on several factors. These include the type of impairment, the severity of impairment, and in some cases, the ability to pay for care.

Long Term Care services may be necessary at any age. The following are three of the most common reasons for Long Term Care:

•Short Term Medical Treatment – Long Term care may be needed when an individual is recovering from surgery or other temporary conditions. For many, Long Term Care helps leaving the hospital and going home.
•Accidents and Injuries – Acute conditions such as broken hips, strokes, disabling accidents and heart attacks often require a longer period of Long Term Care.
•Chronic Illness – Ongoing conditions such as dementia, emphysema or even functional decline (due to the aging process) will result in an extended need for Long Term Care services.
Long Term care services are generally custodial and personal in nature. Because neither Medicare nor medical insurance pay for any custodial care, this should be a major concern to you.


How will I Pay for Long Term Care Services?

You can pay for these services a number of different ways:

•Pay out of your own pocket and deplete a lifetime of savings
•Apply for Medicaid, but you will be required to spend down your assets and “become a ward of the state”
•Purchase a Long Term Care Insurance Policy


How can Long Term Care Insurance Help?

Long Term Care Insurance will provide benefits to help you pay for the Long Term Care services as you need them. A Long Term Care policy is an important part of your financial portfolio. It can help to:

•Protect your assets so you have the money to do all the things you planned to do in retirement
•Preserve your estate to pass unto your heirs.
Long Term Care can also give you “piece of mind” knowing you can:

•Remain in your own home
•Maintain Control
•Receive the quality care you need
•Retain your dignity
•Avoid burdening your family with the responsibility of caring for you


What is the Cost of Long Term Care ?

Long Term Care services can be expensive, and costs vary widely based on where you will be receiving care.

National rates are as follows*:

•The average daily rate for a private room in a nursing home is $203, or $74,095 a year
•The average daily rate for a semi-private room in a nursing home is $176, or $64,240 a year
•The average monthly rate for assisted living facility is $3,061, or $36,372 per year
•The average hourly rate for a home health aid is $19, or a 10 hour day for $190
These costs are expected to DOUBLE in 20 years!!

“An American at age 65 has an average life expectancy of 18.7 more years.”

How will I Pay for Long Term Care Services?

You can pay for these services a number of different ways:

•Pay out of your own pocket and deplete a lifetime of savings
•Apply for Medicaid, but you will be required to spend down your assets and “become a ward of the state”
•Purchase a Long Term Care Insurance Policy


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