"Recurring Premium" Insurance Solutions for Long-Term Care Planning
When advisors consider implementing a Long-Term Care (LTC) component for a client's comprehensive financial plan, 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, and proponents of any LTC Planning solution can twist a repetitively negative narrative about competing solutions, beauty is in the eye of the beholder, not the loudest voice in a public forum or social media.
However, most of the offended are those who have an affinity to LTCi and usually start off with monologues about the evils of Hybrid solutions and pontificate on the "expensive" Single Premiums required to implement one of these plans and why or how that's just an awful, crazy, obnoxiously bad idea. (eye roll).....But whatever you do, don't ask them about leveraging the Pension Protection Act with old annuities or creative ways to maximize low-yield, low-risk deposit accounts for LTC Planning.
Then, they take their aim on Rider solutions and usually include something about the requirement to purchase unnecessary life insurance and, again, the awful, crazy, obnoxiously high cost of these plans (another eye roll).....yet fail to mention the inherent cost certainty nor how their argument doesn't work out too well because, according to LIMRA, 94% of Hybrid solutions (2021) 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 it's time for some of the offenders 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 more than a decade, we've seen the market for Hybrid LTC planning solutions expanding, and the acceptance of these consumer-friendly alternatives have a significant impact on traditional stand-alone LTCi.
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.
Please contact us to discuss specific cases and which planning options would benefit your clients.
Print 