Nobody Talks About This Long-Term Care Insurance Benefit
Very few of my clients buy a “lifetime” or unlimited benefit pool. Usually, because of pricing, they’re going to purchase a three- or four-year benefit period, and with couples, we’ll usually add a shared care rider. Let’s assume we don’t. Let’s assume that Bob and Carol are buying LTC insurance, but their budget is tight, so we can’t really add on shared care, and we certainly can’t buy lifetime benefits. No, instead they’re each buying a good, solid, daily maximum benefit amount, with a three-year benefit period.
At times, a client is so worried about a care event spanning years and years that they almost feel as if buying a three-year benefit period is pointless. That’s unfortunate.
In part, the industry is to blame for this, because for a long time, what were then ridiculously inexpensive lifetime benefit plans were sold as the only way to go —and anything less was just a waste of time. There are still agents out there who insist lifetime benefits are necessary, even if they end up offering a minuscule daily benefit to make the lifetime benefit pool affordable.
Having an unlimited benefit pool doesn’t do you much good if the benefits
are trickling out at $100 a day—you’ll go broke while you’re on claim.
Sometimes the client is focused on the lifetime benefits because Mom or Dad or Aunt Julie had dementia, and spent five or six or seven years in a home. They’re dealing with that experience, and would like a much longer potential benefit, but simply can’t afford it.
When the client is feeling that unease, that’s when we talk about the “hidden” benefit that long-term care insurance provides…time. This is what people forget. There are ways to protect assets in a long-term care situation, even within the (current) five-year look-back period. So, when Bob has his stroke, Carol is going to file the long-term care insurance claim, and get him settled into his care setting, be that at home, in assisted living, or a nursing home. Once that’s done, she’s not going to just sit around and wait for the policy benefits to run out. No, she is going to go to her estate planning or elder law attorney and say, “We have three years until this LTC insurance runs out, let’s do every legal thing we possibly can between now and then to put our assets to use for my family and me.”
There are things she can do. With time to plan, a good attorney will be able to help her identify things she can do with her money that will benefit her without causing issues with Medicaid. There will be time to spend money on exempt items, like home repairs, etc. They’ll have time to consider things like annuities. They may be able to take advantage of caregiver exemptions in some states. An elder law attorney will know what can be done, and while they may not be able to protect everything, they’ll have time to work with the tools they have, to protect what they can. Carol won’t be trying to navigate the legal system in the middle of a crisis, she’ll have time to react—far better than if Bob hadn’t had that three-year LTC policy. In my book, that’s a benefit well worth having.
KERRY PEABODY, CLU®, CLTC®, RICP
Kerry is a Long-Term Care Insurance Specialist with Clark Insurance in Portland, ME. He has been involved with LTCi for more than 20 years. He’s been working directly with consumers, helping families and small business owners protect themselves against the staggering emotional, physical, and financial impact that an extended LTC event can have. His in-depth understanding of the market and the various types of long- term care insurance planning products, and his background in medical underwriting serve his clients well.