Insurance agents can offer a range of products to help their clients prepare for long-term care.
Long-term care is never an easy subject to raise with clients. After all, most people would rather not think about needing prolonged medical assistance due to injury or illness. Nevertheless, insurance agents can offer valuable products that can help their clients cover those costs.
Investing in these products now can make all the difference in the future. In 2016, Genworth estimated the median monthly cost for a private nursing home room reached $7,698, while an in-home health aide for 44 hours per week cost $3,861. Long-term care insurance can defray all of these expenses with only a modest investment from your clients.
Once your clients understand the high cost of long-term care, you, as their trusted insurance advisor, can steer the discussion to insurance products that help cover those expenses. Here are four policies your clients will need if they want to insure against those risks and protect their assets.
1. Long-Term Care Insurance
A long-term care insurance (LTCI) policy covers both nursing home and at-home care beyond what is permitted by traditional health insurance or Medicare. These products usually carry a unique set of underwriting standards, rates, and benefits. An LTCI policy may set maximum coverage caps by number of years allowed for care or total benefit amount.
It’s important for you to make sure your clients know those limits. Encourage your clients to buy a policy when they’re younger. Not only do premiums rise if they apply for coverage at an older age, so do the chances of being denied a policy. For many of your clients, LTCI bought at an affordable price with favorable coverage terms serves as a cornerstone of a comprehensive long-term care plan.
2. Short-Term Care Insurance
If your clients can’t obtain an LTCI policy, short-term care insurance offers a viable alternative for those under age 85. These policies typically offer coverage for 180 to 360 days, with daily benefits set at $50 to $300. Although premiums are generally lower than traditional long-term care insurance, the short duration of this type of coverage may not be suitable for clients with conditions that requires lengthy medical supervision.
3. Annuities with LTC Rider
Though primarily intended as a retirement income tool, certain types of annuities provide cash to cover long-term care expenses. Annuities written with a long-term care (LTC) rider, for example, allow the policyholder to withdraw funds when needed for long-term care, although there are maximum coverage periods. Any funds not used for that purpose add to the annuity’s overall value.
4. Deferred Annuities
Though not specifically designed for long-care expenses, deferred income annuities can start delivering income at a time when a retiree may require financial resources for healthcare. As the name implies, a deferred annuity begins its monthly payments at a later date specified in the contract. A 60-year-old may purchase a deferred annuity with the intention of turning on its income stream at age 70, giving the policyholder extra funds for long-term care if the need arises. Of course, if the need arises before that time, your client will need to dip into their own funds or have another backup policy, like LTCI.Planning for long-term care might not be a topic your prospects and clients want to discuss, but it’s important for you to broach the subject with them and show them there are insurance products specifically designed to finance these expenses. Although long-term care insurance is probably the best known, there are other options you can explore with your clients to ensure they have the funds available to pay for their medical care when they need it most.