Alternatives to Traditional LTCI When Health or Age Cause Trouble

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Mary Sizemore
Mary Sizemore August 14, 2023

With over 25 years of experience, Mary shares her industry knowledge by helping agents and their clients navigate various insurance products. She also stays up to date on current products and trends to support, mentor, and guide her teammates.

As important as it is for your client to plan for long-term care costs, traditional long-term care insurance (LTCI) may not be a good fit. Whether it be age, health issues, or budget, traditional LTCI isn’t the right solution for everyone. But that doesn’t mean your client shouldn’t plan for a chronic illness or disability that requires care!

Read More: Educating Clients about Long-Term Care Planning Options

Here are a few alternative solutions to a traditional long-term care insurance policy.

Short-Term Care

Almost 40% of individuals aged 66-69 and over 45% of those over age 70 are declined when applying for traditional long-term care insurance. With simplified underwriting, short-term care offers an alternative for clients looking to pre-plan for care costs associated with a chronic illness. Additionally, short-term care offers coverage for individuals up to age 89, whereas traditional LTCI usually cuts off applicants at age 75.

Short-term care offers a shorter benefit duration (typically one year or less), which ensures premiums are more affordable than a traditional long-term care insurance policy. Some LTCI claims last for many years, but approximately half of all long-term care insurance claims are for less than one year of care.

Short-term care policies are flexible and typically cover care in the home, assisted living facilities, and skilled nursing care. Policies can also be designed to meet your client’s needs and premium tolerance.  The only significant downside is that short-term care policies are not available in every state.

Fixed-Indexed Deferred Annuity with LTCI Rider

For clients with significant chronic health conditions, we offer this guaranteed issue product, meaning your client can qualify without underwriting. If your client does complete a simple underwriting process, they may qualify for additional benefits beyond those offered under the guaranteed issue criteria. For instance, a recent client with Parkinson’s disease applied and was approved at the Preferred rate. This policy is available to clients aged 55-80, depending on their resident state, with a minimum premium of $50,000. While the guaranteed issue aspect of the policy is attractive, it is a competitive option for your healthy clients as well.

True Freedom

True Freedom is a nationwide home health care services option with no age limit or medical underwriting. It’s not an insurance policy.  Rather, True Freedom is a contract that provides a maximum number of lifetime agency hours to be used for assistance with ADLs, meal preparation, housekeeping, transportation to doctors’ appointments, and more. Individuals can choose from four plan designs with a couple’s discount for those who apply together.

Crisis Planning with a Medicaid Compliant Annuity

The Medicaid Compliant Annuity (MCA) is a revolutionary product for clients who no longer qualify for LTCI and currently require care. It’s a single premium immediate annuity that converts assets into an income stream with zero cash value. An MCA acts as a spend-down tool to help agents and advisors accelerate Medicaid eligibility for their clients who are facing a costly nursing home stay. An MCA may be right for your client if they reside in a Medicaid-approved facility, have exhausted their Medicare or long-term care insurance benefits, are paying for care out of pocket, and have countable assets exceeding Medicaid’s limitation.

Read More: How to Start the Long-Term Care Planning Conversation with Clients

The Krause Agency is ready to help agents and advisors with all planning related to long-term care. Contact our team today to discuss your client’s situation and design a plan that exceeds their expectations.