• By Allan M Block Blogging Team
  • Posted August 16, 2016

Why Buy Life Insurance instead of traditional LTC Health Insurance now?


In the last six months the life & health insurance brokerage community has seen a surge of very large Long-Term Care insurance premium increases from many of the nation’s largest insurers. Many state insurance departments recently approved rate increases as high as 68%. Needless to say, existing policy holders are not happy. So why is this happening? There are several legitimate reasons why the traditional long-term care insurance marketplace is floundering. Most in the industry agree on the following reasons below which have been abbreviated due to the shortness of this article:

  1. Simplified Underwriting allowed many Long-Term Care insurance applicants to qualify for coverage without bloodwork or complete medical records who may have not been approved otherwise.
  2. Like major medical health insurance, the cost of long-term care over the last two decades has spiraled out of control with no end in sight, especially the cost of Skilled Nursing Homes.
  3. Unexpected lower than normal lapse ratios on existing policy owners contributed to thousands more claims.
  4. The extended low interest rate environment has limited the insurer’s ability to reinvest annual premiums safely in order to earn the necessary profits to cover their future claims.
  5. Unforeseen consequences of the National Association of Insurance Commissioners rate stabilization regulations.

All of these factors have contributed significantly to increasing the claims on older policies than the insurers originally assumed or planned. In fact, the overall number of long-term care insurance policies sold has fallen from 700,000 in 2000 to only 100,000 in 2015¹. It seems the public is aware of these rising premiums and is worried about how they will be able to afford them down the road. At a time when living expenses keep increasing, no one wants to worry about whether or not they will be able to afford their long-term care insurance premium increase at age 80? So what is the alternative solution for people who want to buy long-term care insurance?

Permanent life insurance policies with a Long-Term Care Insurance Rider or Accelerated Benefit Rider is one truly viable answer. These “hybrid” or “linked” products as they are referred to provide both guaranteed tax-free life & long-term care benefits. In addition, these policies can be purchased on a single premium basis or a fixed guaranteed schedule for a specified number of years, thus eliminating the increasing future premiums concern.

In this way, policy owners can fully recover premiums in the case of premature death while simultaneously leveraging those same dollars three, four or even five times to one to cover future long-term care expenses. Moreover, one contract in particular will allow the policy owner to rescind their policy at any time for a full 100% refund of premium with no surrender charges!

For more information or answers to your insurance questions, contact us at Allan Block Insurance Agency, www.ambins.com, located in Tarrytown, NY in the heart of Westchester County, a key business district near New York City.  We write auto, home, renters, condo, co-op, personal, business, life and group insurance for clients locally and in NYC, CT, NJ, PA, MA and many other states. The Professional Agency with the Personal Touch.