When advisors implement a Long-Term Care (LTC) component of a client's comprehensive financial plan is implemented, most scenarios include a Recurring Premium solution; such as traditional, stand-alone, LTC insurance (LTCi), "Hybrid" Life/LTC solution or a life insurance policy with an LTC or Chronic Illness "Rider". While all are potential options, the loudest voices in public forums or social media are the proponents of traditional LTCi, who like to twist a repetitively negative narrative about anything that's not LTCi.
Most of the offended usually start off with monologues about Hybrid solutions, pontificating on required Single Premiums to implement one of these plans and why or how that's just an awful, crazy, obnoxiously bad idea. (eye roll).....and then there are the loud diatribes about Rider solutions that usually include something about the requirement to purchase unneeded life insurance and, again, the awful, crazy, obnoxiously high cost of these plans (another eye roll).
Unfortunately, that argument doesn't work out too well because, according to LIMRA, 94% of Hybrid solutions (2019) were recurring premium products.
Then the argument may turn to the "benefit" of Partnership Qualified LTC insurance. With all due respect, discussing a plan predicated on qualifying for Medicaid cannot be a serious discussion while considering the implementation of Financial, Retirement, Estate or Risk Management Planning. It's that simple! If you want a deeper dive as to why then read "Eliminating Medicaid As A Planning Alternative".
Perhaps is time for some to admit they don't fully understand the complexities of financial planning or they simply have some extreme product bias on this topic?
Setting that aside, the table below looks at five features of LTC planning solutions and how those compare from one product to one another. If a client wanted most or all of these features, then a recurring premium hybrid solution may, in fact, be a very good choice to consider......
Even with a compelling argument made, and features/benefits as facts, many proponents of traditional LTCi still avoid recurring premium Hybrid solutions.....The question is WHY? Perhaps it's the inability to have an honest discussion about these options because (1) they don't understand them or (2) it destroys a narrative that LTC insurance is the only option for this scenario. In any event, there's one classic market axiom that can't be ignored - The trend is your friend - and an existing trend will continue unless there's a significant reason for a reversal.
The existing, nearly decade-long trend (below) may indicate that those avoiding Hybrid solutions are be doing so potential at their own risk, and the market for these planning solutions should not be ignored by anyone who considers themselves a specialist in this space.....
For nearly a decade now, we've seen the market for Hybrid LTC planning solutions expanding, and the acceptance of these consumer-friendly alternatives has also had a significant impact on traditional stand-alone LTCi. Most recently, with a major carrier exiting the LTC insurance business altogether (Transamerica) and another in a "fluid and troubling" situation (Genworth) according to S&P Global.
Unfortunately, for those who still think or feel traditional, stand-alone, LTC insurance offers value to consumers, or Partnership qualified plans should be the focus of discussion or that tax-deductible LTCi premiums are important to consumers, the reality is actually quite simple: The market does not care what you "think or "feel" and the near decade-long trend in the MARKET, in fact, provides the proof.
As the market expands for these client-focused Long-Term Care planning solutions, please contact us to discuss specific cases or how these options might benefit a client.