Long-term care insurance (LTC) has experienced some growing pains in recent years. Sustained low interest rates and coverage limitations have made it difficult for some to find policies that meet their needs.1
As a result, many LTC insurers have exited the business because they couldn’t make a profit.Today, there are only 14 carriers still writing stand-alone LTC policies in the United States, and only about 8 percent of U.S. adults own this type of insurance.2
As a general rule, LTC benefits are triggered when a policyholder can no longer perform two of six designated “activities of daily living” (ADLs) due to physical or cognitive impairments, or if he or she requires substantial supervision due to a severe cognitive impairment, such as Alzheimer’s disease. 3
The six ADLs are: eating, bathing, dressing, the ability to move from bed to chair, continence and using the toilet independently.4 Some individuals may experience mobility issues that require help bathing and dressing, yet cognitively they remain sharp and otherwise healthy for many years.
Of all people age 65 and older, 75 percent will eventually need long-term care, and mental disorders, such as Alzheimer’s, account for half of all LTC claim dollars paid.5
The LTC industry has changed substantially over the past decade. With lifespans extending longer than ever, many carriers have altered policies to incorporate benefit restrictions. As a result of some contracts being held longer than expected, some of the companies that still offer LTC policies have had to raise premiums and reduce benefits.6
In addition to stand-alone policies, there are also life insurance and annuity contracts with long-term care benefit riders. These riders are generally optional and available at an additional cost. Options may vary by insurance company and product. They may also be subject to eligibility requirements and may not be available in all states.
1 Allison Bell. LifeHealthPro. Sept. 7, 2016. “5 ways Genworth wants to reboot LTCI.” http://www.lifehealthpro.com/2016/09/07/5-ways-genworth-wants-to-reboot-ltci. Accessed Sept. 9, 2016.
3 The Federal Long Term Care Insurance Program. “Qualifying for Benefits.” https://www.ltcfeds.com/programdetails/qualifyingbenefits.html. Accessed Oct. 6, 2016.
5 LTC Tree. Aug. 15, 2016. “Long Term Care Statistics.” https://www.ltctree.com/long-term-care-statistics/. Accessed Oct. 13, 2016.
6 Wade Pfau. Forbes. Jan. 19, 2016. “Potential Concerns and Risks for Traditional Long-Term Care Insurance.” http://www.forbes.com/sites/wadepfau/2016/01/19/potential-concerns-and-risks-for-traditional-long-term-care-insurance/#32adb3361a61. Accessed Oct. 6, 2016.
Long-term care insurance policies are contracts between you and an insurance company. Insurance product guarantees rely on the financial strength and claims-paying ability of the issuing insurer.
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