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NAIFA's Limited & Extended Care Planning Center

The LECP Center empowers professionals to network with solution and service providers to share best practices, directly access subject matter experts, research, training and resources; and provide thought leadership so we may continue to address the changing needs of the market.

Many clients find that the best way for them to plan for LTC is by purchasing a linked life/ltc plan.  Compared to traditional LTC policies which provide pure long-term care protection (and the most LTC protection per premium dollar) linked Life/LTC trade off some of that leverage to provide guaranteed premiums and a life insurance benefit.

The current pandemic has increased awareness of long-term care and the need to plan.  It has also had broader economic impact in the form of higher unemployment and lower long-term interest rates.

Those lower long-term interest rates can have a dramatic impact on the performance of an insurance carriers reserves - especially on single-premium life/LTC products. If you are a financial professional, it is critical to let you clients know of the changes and impact.

To give an example, let's say a 60 year old single woman in Ilinois is interested in repositioning some assets from investments into a single premium hybrid life/LTC plans.   She's working with an advisor who has narrowed down the choices to two carriers, and decided the ideal single premium would be $100,000.  

The advisor worked with their brokerage general agency who provided this side-by-side comparison of LTC Benefits.  Note: These are actual premiums from currently available products and carriers.

  Linked Life/LTC Carrier Option 1 Linked Life/LTC Carrier Option 2
Initial Monthly LTC Benefit -(use for home or LTC facilities $4,000 $3,435
Initial LTC Total Benefit $254,847 $218,891
Long-Term Care Benefit Period 5 Years 5 Years
LTC Inflation Option 3% compound 3% compound
Monthly Benefit at Age 90 $9,701 $8,340
Total Benefit Pool at Age 90 $618,600 $531,307
Cash Surrender Value Age 90 $70,000 $102,303
Type of Policy Expense Reimbursement Cash Indemnity
Current Single Premium $100,000 $100,000
NEW Premium Approx $120,000 for applications received after June 26th, 2020 Approximately $113,500 for applications received after July 17th, 2020


For these particular clients, their decision will based on whether they want more LTC benefit per premium dollar from the reimbursement products or a little less benefit but the flexibility of a cash plan.  In the above example they may also be interested in the higher cash surrender value (in case they change their mind) of carrier 2 as well. 

However, regardless of what decision they make one thing is clear - they can save substantially  by purchasing now instead of waiting until later this year.  Because of the extreme low interest rate environment, carrier 1 is increasing single premiums about 20% for applications received after June 26th and Carrier 2 is increasing single premiums about 13.5% for applications received after July 17th. 

Both these carriers offer other premium payment options such as 10-pay which will be subject to new pricing but won't be as adversely impacted.

It's always a good time to plan for long-term care - but it may be an especially good time to consider LTC Insurance because plans may never again be such a great value.