When I speak to leads and prospects at continuing care retirement communities (CCRCs), the issue of long-term care insurance (LTCI) inevitably arises. Those who have it question the need for Life Care, and those who don’t wonder whether they should purchase LTCI in lieu of Life Care.
It’s a fine line to walk when promoting CCRCs, because you don’t want to be overtly dismissive of the value of LTCI, possibly offending those prospects who have made the decision to purchase policies. Conversely, you don’t want to inspire people to forego the many benefits of Life Care and place all their faith in an LTCI policy.
Rarely is having too much insurance a bad thing, but over time with escalating health care costs, the value of LTCI has been decreasing, while premiums have been increasing. According to the American Association for Long-Term Care Insurance, the average cost of an LTCI policy for a 55-year-old couple has jumped 80 percent since 2007.
Plus, there is no limit on additional rate hikes. The Boston Globe reports that the AARP is warning consumers to make sure they’ll be able to afford rapidly rising premiums before they buy long-term care policies.
“If I knew it was going to be like this, I wouldn’t have bought it,” said 71-year-old George DiBlasi, whose LTCI premiums increased by ten percent, according to The Boston Globe.
Perhaps most vexing is that LTCI policies come with incredibly complex provisions that the average person often can’t understand by simply reading the policy. This can include complicated definitions of terms such as reduced benefits for in-home care, benefits paid daily versus monthly, service day elimination benefits calculations, reimbursement versus cash benefits, COLA simple interest versus compound interest and non-reimbursable premiums.
Plus, the claims process for LTCI can be daunting and stressful. There are many unsettling stories of insurance companies challenging the claims of their LTCI policyholders at a time when most seniors are not well positioned to contest denials by insurers.
Unlike in years past, the market variety of LTCI policies is greatly reduced. Ten years ago, approximately 100 insurance companies offered LTCI. Today, according to LifePlans Inc., an industry consulting company, only about a dozen companies now underwrite LTCI.
So what do you say to prospects who already own LTCI or are considering buying it in lieu of Life Care?
First, emphasize that LTCI is not Life Care; it’s simply a cash benefit. It doesn’t provide a caring environment by people you know and who know you.
It also doesn’t concern itself with the many other factors that should be considered when making a transition to a long-term care environment, such as location, quality of the medical staff, dining options, and recreational, social, educational and cultural activities.
With LTCI, there’s always the risk that the pool of benefit money will run dry while you still need it. But with Life Care, you receive secure and affordable long-term health care – as opposed to coverage – part of a predictable financial plan that safeguards assets while providing a home for life.
Moreover, by choosing Life Care, residents don’t have to prove a claim that they deserve long-term care when the time comes.
Here’s another plus: Those who already own LTCI policies can use them in conjunction with Life Care to increase their financial portfolios and upgrade their Life Care benefits. For example, if a person living at a CCRC requires assisted living or skilled nursing care for an extended period of time and makes a successful claim against their LTCI policy, the insurance benefit can be used to pay their monthly service fee. That allows residents to allocate extra money toward their investments, which in turn enhances their estates. Also, the insurance benefit can be used to pay for additional meals or an upgrade from a semiprivate to a private room.
So comparing Life Care to LTCI is like comparing apples to oranges. And it’s easy to see that Life Care is more fruitful than LTCI.