Integrated Strategies
For Every Step of Life

  • Main Office:
  • 102 South Main Street
  • Bluffton, OH 45817
  • 419.358.8060
  • cwmg@lpl.com
Investment Services Financial Planning About Team

Welcome to Citizens Wealth Management Group

 

The Changing Face of Long-Term Care Insurance

There is both bad news and good news when looking at long-term care insurance. Long-term care is essential for many in the Baby Boom generation. The over-65 demographic in the U.S. is expected to grow from 39 million to 51 million people between 2009 and 2019.[i] At age 65, this group can expect to live to age 83,on average. While that may be welcome news to many, it should put preparing for the cost of long-term care high on their to-do lists because most people over the age of 65 need more than one or two years of long-term care.[ii]

The Bad News:  Long-term care policies are less affordable

Recently, consumers and financial advisors have begun to question whether stand-alone long-term care insurance is financially viable. During the past five years, 10 of the top 20 companies offering individual long-term care policies have abandoned the market because increasing longevity, uncertain care costs, low interest rates, and a lower-than-expected lapse rate created an environment in which they could not afford to keep issuing policies.[iii] Companies that still offer stand-alone long-term care policies have dramatically raised premiums on new contracts and retain the right to increase rates, when needed, on new and existing policies. Many also have limited benefits and benefit periods. As a result, it’s fair to say fewer and fewer people will be able to obtain and maintain traditional stand-alone long-term care policies. 

The Good News:  An alternative is available

Many industry experts believe that Linked Benefit/Hybrid Products provide a sound alternative in the current economic climate. A hybrid product is a life insurance policy with a long-term care rider. The rider allows a portion of the death benefit to be paid out to cover long-term care expenses. This type of policy appeals to many, especially if they are unsure about whether they will ever need to use the insurance. With a long-term care rider, if you never need long-term care, your beneficiaries will receive benefits. Also, unlike traditional long-term care policies, which may increase your premium, premiums for hybrid products typically are fixed. For people with a limited budget or tight cash flow, this may be very attractive.Riders are additional guarantee options which are available and may carry additional fees, charges, and restrictions. Use of the long-term care benefits will reduce the death benefit of the policy. You should review a contract carefully before purchasing. Guarantees are based on the claims-paying ability of the issuing insurance company.

While a hybrid insurance solution doesn’t eliminate all of your potential long-term care risk as a traditional long-term care policy may, knowing you have some protection can provide peace of mind.

 

 


[i] Centers for Medicare and Medicaid Services, National Health Expenditure Projections 2009-2019, September 2010 (https://www.cms.gov/NationalHealthExpendData/downloads/NHEProjections2009to2019.pdf)

[ii] Brandeis University, Living Longer on Less: The New Economic (In) Security of Seniors, March 26, 2010 (http://iasp.brandeis.edu/pdfs/LLOL%20Report.pdf

[iii] Chicago Tribune, Long-Term Care Dilemma, April 13, 2012

 

 

 

Helpful Content

What to Look for in Personal Finance Apps

What to Look for in Personal Finance Apps

An increasing number have been developed to help individuals with their personal finances.

Emerging Market Opportunities

Emerging Market Opportunities

What are your options for investing in emerging markets?

When Should You Take Social Security

When Should You Take Social Security

Monthly Social Security payments differ substantially depending on when you start receiving benefits.

 

What If You Get Audited?

The chances of an IRS audit aren't that high. And being audited does not necessarily imply that the IRS suspects wrongdoing.

How Stocks Work

Understanding how a stock works is key to understanding your investments.

What Is an Annuity?

Annuities are versatile tools that can help you save for retirement and generate income in retirement.

Assess Life Insurance Needs

How to help determine life insurance needs to provide for your family after you pass away.

Disability and Your Finances

In the event of an unforeseen accident or illness, disability insurance may be a good way to protect your income and savings.

Should You Choose a Fixed or Variable?

When selecting a mortgage, one of the most critical choices is between a fixed or variable interest-rate mortgage.

View all articles arrow

What Is My Current Cash Flow?

Assess whether you are running “in the black” or “in the red” each month.

Paying Off a Credit Card

Enter various payment options and determine how long it may take to pay off a credit card.

Capital Gains Tax Estimator

Use this calculator to estimate your capital gains tax.

What's My Potential Estate Tax?

This calculator helps estimate your federal estate tax liability.

Doubling Your Money

This calculator demonstrates the power of compound interest.

Tax Freedom Day

Assess how many days you'll work to pay your federal tax liability.

View all calculators arrow

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

Keys to Investing for Retirement

There are some key concepts to understand when investing for retirement

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

Tax Management Strategies

Learn more about taxes, tax-favored investing, and tax strategies.

View all presentations arrow

Emerging Market Opportunities

What are your options for investing in emerging markets?

Exit Strategies of the Rich and Famous

Estate conservation is too important to put off. Do you have a smart exit strategy?

Events on Wall Street

Can successful investors predict changes in the markets? Some can but others miss the market’s signals.

The Real Cost of a Vacation Home

What if instead of buying that home, you invested that money?

Should You Tap Retirement Savings to Fund College?

Three things to consider before dipping into retirement savings to pay for college.

The Power of Compound Interest

Learn how to harness the power of compound interest for your investments.

View all videos arrow