Long-term care insurance carriers are tailoring their products in ways that make them less expensive and more appealing to middle-class families.

Steve Cain, a principal and national sales leader with LTCI Partners, a Madison, Wis.-based brokerage specializing in LTC insurance, observed, “There’s a resounding trend of carriers and distributors trying to tap into the middle market. For people who have investible assets or a high income, the penetration rate is pretty solid. We’ve done a good job as an industry upstream. The real opportunity is in the mass middle. The carriers are turned on to this.”

In fact, carriers are offering plans with lower premiums, but higher cost-sharing, so it covers a portion of your long-term care needs.

“Don’t let perfect be the enemy of good,” Cain recommended. “In the recent past, you had a lot of advisers out there that would try to solve the entire problem or nothing. If you’re talking to that middle-income family, these are the people that need it the most. You can’t come in with a $3,500 per year premium. You have to come in with a $1,500 premium that they feel comfortable with.”

Jesse Slome, executive director of the American Association for Long-term Care Insurance, has noticed a trend in reaching out to middle-income Americans.

“Today's products do have some features and options that are specifically attractive to middle-income individuals,” he said. “For example, the shared care option allows a couple to reduce their cost of coverage, but share a combined pool of benefits. Also, some of the newer inflation growth options are of growing interest to middle-income individuals. They enable you to purchase a nominal amount of affordable coverage today, while locking in your health should you wish to add to your coverage in future years.”

That’s also called periodic inflation protection or future purchase options, where you can buy a policy now and add more coverage to it later without having to undergo medical underwriting again. It’s less expensive than the typical approach of the past, where the person would buy a policy with a rider to include 3% or 5% inflation protection, which makes the whole policy a lot more expensive.

 

Necessary benefit

At least 24% of employers provide long-term care insurance to their employees this year, down from 31% last year, according to a survey by the Society for Human Resource Management.

Most long-term care policies cover services provided at the beneficiary’s home, assisted living facilities, nursing homes, adult day centers and hospice care sites. The services include things like skilled nursing care; occupational, speech, physical, and rehabilitation therapy; and help with personal care, such as bathing and dressing.

At least 70% of people who reach age 65 will use some form of LTC during their lifetime, either at home or elsewhere, according to the U.S. Department of Health and Human Services.

Your likelihood of needing long-term care is higher if you are female, have a disability or have a chronic illness. On average, women need long-term care for a longer period of time (3.7 years) than men (2.2 years) because women tend to live longer, according to HHS.

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