Presented by Donna Ries
When considering long term care insurance, one of the first questions you’ll need to answer is how much coverage and how long should I purchase the benefits. One idea to help your clients decide is by considering the concept of whether to choose a larger benefit amount for a shorter period of time (short and fat) or a lower benefit amount for an extended period of time (long and lean). Keep in mind, the maximum benefit periods for most LTC carriers do not exceed five or six years.
With LTC insurance, the pool of money can last longer than people think. The pool of money is the client’s benefit amount multiplied by the number of months (benefit period). According to the U.S. Department of Health and Human Services, longtermcare.gov, Web Accessed September 18, 2014, three years is the average length of a claim. Many other statistics about costs and common misperceptions about the extended care planning can be found in Genworth’s Dispel the Myths about Long Term Care brochure.
For example, a client could choose a $7,500 monthly benefit for two years (short and fat) and the LTC policy would contain the same $180,000 pool of money as a lower monthly benefit of $3,000 for a five year benefit period (long and lean). With the comparison between major LTC carriers, the premium is less with the long and lean option, however, the out-of-pocket expenses may be more with a lower benefit amount. With the larger monthly benefit amount, it may be likely the policy will last longer than two years with less out-of-pocket expenses.
There is no one size fits all with LTCI planning. It’s all a matter of the client’s preference. Most clients want some type of LTC protection rather than no protection and will choose to supplement their LTC policy. The goal is to find which concept best suits your client’s needs. Contact your LTC marketer to discuss the various long term care insurance options that best suit your client.
Financial Brokerage, Inc. 