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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.

Years from now, those of us who lived through the Coronavirus Pandemic will think about the early rush to buy toilet paper and how odd that seemed. As of today (and things could change), there is plenty available at Costco, but they are limiting people to just one 30 pack. Just how long does a 30 pack last? Well, someone has created a Coronavirus Poop Calculator (thepooptool.com) to help people figure that out. For a family of 4, a 30 pack of Costco toilet paper should last 90 days. Amazingly and unexpectedly, it seems all Americans are involved with Toilet Paper inventory management.

We can chuckle a little bit about toilet paper. However, it's not just household products we are taking inventory of.

In conversations I've had with financial advisors, many of them are saying clients are taking a current financial inventory as well. Specifically, many people are worried about worst case scenarios and ways to "insure" against them - i.e. liquidity. They are counting up assets that are cash or cash equivalents. They are realizing the value of social security - a government lifetime income annuity that many people have access to. They are concerned about the loss of investments values in this volatile economy.

For the first time in many years, some are looking at their insurance situation, including life insurance, annuities, and long-term care insurance. Fear of an early death is tempered by owning life insurance, while the cash value provides additional stability and liquidity.

LTC Insurance, whether traditional or hybrid life/LTC, can play a significant protection role as well. Here are three ways an LTC Insurance plan helps during turbulent times:

  1. Provides a well-defined pool of money that inflates over time to pay for care. You can even buy an unlimited benefit plan for "tail" coverage. LTCI coverage isn't subject to market whims - whatever policy benefit is projected in the future should be there.
  2. Allows the rest of the investment portfolio to be invested more aggressively. If you estimate your potential LTC costs in retirement at age 80 to be $500K and you have a LTC policy with at least that benefit, you won't have to allocate other conservative, liquid resources to pay for care.
  3. Maintains maximum flexibility in where care is provided. We've seen the sad stories of Coronavirus circulating through nursing homes. Although the pandemic will pass and facility care offers many advantages, LTC Insurance allows for the flexibility of care at home or in assisted living/skilled nursing homes.

    If someone owns or buys a policy from an established insurer with a long track record, they should feel a sense that their policy is safe.

Many investors are warned to not try and "time" the market. In the same way, people looking at LTC Insurance shouldn't try to time their purchase as well. In fact, there are a couple of reasons why anyone interested may want to take action as soon as possible:

  1. The extremely low interest rates and the conservative investing nature of insurance reserves mean that carriers may have to re-price their products to reflect the new reality. Some carriers, such as Nationwide have done so and have deadlines to submit new business before premiums increase.
  2. The uncertain, long-term health impacts of Coronavirus has insurance carriers taking a conservative approach to underwriting. Some companies have postponed underwriting for those impacted by the virus, and others have lowered the maximum issue age for policies. Some applicants and health care providers are concerned about F2F (face to face) assessments as well. Underwriting can change at anytime without advanced notice.

For a typical healthy couple in their 50's, they can apply for and purchase traditional or linked life/LTC plans over the phone or web with fully electronic applications.

Yes, we all need toilet paper. But so many people would benefit from considering LTC Insurance protection - and the time to act is now.

Note: LTCI Partners has created a Coronavirus update page to give updates on product changes and availability.

Topics: Advice articles about planning, Long-term Care Insurance in the News, Long-term care planning, hybrid life/Long-Term Care