Linked long term care coverage is starting to appeal to a younger audience due to claims with large payouts.
In order to maintain coverage against the high costs of long term care, a growing number of national insurers are now offering a combination product that includes life insurance with the option for LTC benefits.
This information was drawn from the 2012 Buyer Study, which was performed by the national trade group, the American Association for Long-Term Care Insurance. These products that offer linked benefits (also known as combination policies) are becoming increasingly popular for individuals between the ages of 40 and 60.
The study results showed that 53 percent of linked long term care policies were younger than 65.
It examined the participation in these policies in 2011 and compared those statistics to those in 2010, when only 48 percent of the combined policy buyers were within that age group. It showed that among the buyers, 42.5 percent of the males and 38.5 percent of the females were within the 55 to 64 age group.
According to the Association’s director, Jesse Slome, “A linked benefit policy has advantages that many pre-retirement consumers find attractive.” This type of policy can cover the costs associated with long term care at a special facility or even at home. Beyond that, though, due to the hybrid nature of these linked products any of the unused benefits are still allowed to be passed on, income tax-free, to named beneficiaries.
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OneAmerica vice president, Chris Coudret, CLU, ChFC, said that “At a time when long-term care is increasingly top of mind, these life insurance-based solutions avoid the ‘use it or lose it’ risk associated with traditional long term care insurance.” His company is a leading linked long term care insurance provider. He added that:
“In most cases, people make a single payment, effectively removing the risk of future premium increases.”
Another statement by the American Association for Long-Term Care Insurance revealed that many policyholders are finding that even after a small number of premiums payments, benefits can be extensive.
In a report, they gave the example of the largest claim in long term insurance history, totaling $1.7 million, which was open as of December 31, 2011, after having made $2,600 in premiums payments over a period of three years.