Finding The Right Fit For Your Client’s Long Term Care Planning

Overcoming obstacles and objections you may face is key when discussing long term care planning with your clients. Once your client is on board, it is important to help them choose long term care coverage that best fits with their overall financial strategy.

Helping clients understand long term care insurance
Common questions that clients may have are:

  • How much is long term care insurance?
  • What does long term care insurance cover?
  • How are long term care benefits paid?
  • How does long term care insurance work?

How much does long term care insurance cost?
The cost of long term care coverage depends on factors including age, sex, and health of the insured as well as planning details such as the amount of coverage, whether inflation is added, and whether or not the long term care plan will be paired with a financial product. The variety of products available today can provide an opportunity to match a policy with a client’s budget and other potential planning needs.

What a long term care policy covers
While basic coverage is universal among most policies, it is important to read the contract for small details and variances in coverage. Contractually, all policies cover the basics such as:

  • Home Health Care
  • Assisted Living
  • Adult Day Care
  • Nursing Home Care

However, the type of long term care benefit payment model the policy uses may also help to establish what other long term care services the policy benefits can be used for, and/or how much of the benefit dollars will be available to be spent for a particular type of care service.

Long term care benefit payment models
While there are many variations, long term care benefits models generally fall into two categories—reimbursement and cash indemnity plans.

These policies only reimburse the actual cost of qualifying care, up to the issued policy benefit amount. Bills and receipts must be submitted each month to determine the amount of reimbursement. Keep in mind that reimbursement policies may have limitations and do not cover all expenses a person may consider necessary for their care, thus there may be items or services on a bill that will not qualify for reimbursement (i.e. hair care from the facility’s beauty parlor, massage therapy, or upkeep of home care is being received in). Such expenses will have to be paid for out of pocket.

Cash Indemnity
These policies are generally more flexible than reimbursement plans. Once payments begin, there is no monthly paperwork required and the full available long term care benefit is paid each month. The insurer places no restrictions on how long term care benefits are used for care. Benefits can be spent on whatever care services are desired. This would include using 100 percent of the long term care benefits to pay for unlicensed care (including immediate family members) as well as to pay for ancillary care needs such as prescriptions, home maintenance, laundry, etc.

Making the most of your long term care planning
Choosing the best coverage for your client’s situation is a multi-step process. It starts with looking at his overall financial strategy, both current and future. This would include:

  • Assessing whether additional life insurance or retirement planning is needed.
  • If legacy planning is desired (whether family legacy or charitable giving).
  • Financial protection of a surviving spouse.
  • How much income or which asset is available to fund the long term care coverage.
  • What long term care benefit model would be preferable.

Once you have determined these planning points, you can move forward with product choice. There are several ways to fund for a long term care event, including:

  • Traditional long term care insurance.
  • Long term care rider on life insurance.
  • Linked benefit (Hybrid) long term care coverage.

Each one of these solutions works differently, addresses different concerns, and provides its own unique way to pair with an overall financial strategy. These differences may even affect when to buy long term care insurance.

Traditional long term care insurance
This policy only pays if a qualifying long term care event occurs. While often providing the most coverage for the least cost, premiums are not guaranteed. There may be more flexibility in choosing options such as elimination periods, benefit periods, and inflation. With most carriers, only lifetime premium payment schedules are available and, generally, these policies only pay long term care benefits by reimbursement.

This solution may be valued by people who:

  • Do not want or need life insurance.
  • Want more customization of benefits.
  • Understand that the policy is essentially “use it or lose it” regarding premiums paid (a few companies offer riders for an additional cost that return unused premium to beneficiaries).
  • Are looking for the most coverage for the least amount of premium.

Life insurance with a long term care rider
This solution is for people with a life insurance need, but also have long term care concerns. This policy can help provide family protection now but, if life insurance needs diminish in the future, the policy can transition more into being long term care protection. Long term care benefits are paid as an acceleration of the death benefit but, if long term care benefits are little used or never needed, any remaining death benefit will be paid to the beneficiary. Some solutions can guarantee both the premiums and long term care benefits (as long as premiums are paid as scheduled). There is a multitude of premium schedules available and both reimbursement and cash indemnity benefits are available depending on the carrier chosen. This solution provides the best leverage of death benefit but may not provide the greatest amount in long term care benefits compared to other products.

This solution may be more desirable for people who:

  • Currently have a life insurance need.
  • Want both life insurance and long term care but don’t want to buy each separately.
  • Want more choice in premium schedules—either to fit a budget or pay up premium obligations quickly.
  • Like the idea of a leveraged death benefit that pays if the policy is little or never used.

Linked benefit (also known as Hybrid) long term care coverage
These policies are for people whose primary need is long term care but want cost recovery if long term care is little or never needed. This policy has two benefit pools linked together:

  • The first benefit pool is life insurance with a long term care rider, and long term care benefits are paid from this benefit pool first. If long term care is never needed, the death benefit is guaranteed to be at least equal to or better than the total premiums paid.
  • The second benefit pool continues to pay long term care benefits but is for long term care benefits only.

These policies have options more similar to traditional long term care coverage such as choice of benefit periods and inflation options. Policy premiums and long term care benefits are guaranteed (assuming the premium is paid as scheduled). These policies can be purchased with a single premium and limited pays such as five or 10 years, and some insurance companies offer longer premium schedules such as pay to age 65 and pay to age 100.

This coverage is good for people who:

  • Primarily want long term care coverage.
  • Are looking for some customized policy options.
  • Want guaranteed premiums and benefits.
  • Want premium protection if the policy is little or not used.

Long term care planning can be an important part of a retirement strategy. There are more options than ever for finding long term care coverage that can fit into a client’s budget as well as their current and future financial approach.

Shawn Britt has been engaged in the life insurance and long term care industry for more than 25 years. She joined Nationwide in 2000 and has been a member of Nationwide’s advanced sales team since 2005. Britt has been a major influence in the development and promotion of Nationwide’s suite of long term care product solutions. She is a frequently published author of white papers and articles on long term care for Nationwide as well as the insurance industry. She has been widely published and interviewed regarding long term care for numerous trade publications and nationwide media that include the CLTC Quarterly Digest, National Underwriter, Financial Advisor, Center for Long-Term Care Reform, The Wall Street Journal, CBS New Money Watch, Market Watch Radio and LifeHealthPro.

Britt is a frequent presenter and keynote speaker at numerous industry events and conferences including AALU and ILTCI. She has served on the Board of Financial Professionals for CLTC and currently serves as a CLTC contributor. She also served for several years as an adjunct professor at The Ohio State University and has been recognized as an alumnus of the month by The American College.

Britt may reached via email at