Long Term Care Insurance policies may not be suitable for everyone. While for some individual’s it may be an affordable and attractive form of insurance, there may be others for whom the cost is too great, or the benefits may be insufficient to meet their needs. As an agent helping your client determine their needs and financial objectives, you should make certain that you help the client carefully examine their needs and their available resources. If the client cannot afford a policy or the policy would cause financial hardship, then the client is probably not a good candidate for long term care insurance. Whether a person should buy a policy may depend on their age, overall retirement objectives, health, net worth and income.
If a person’s only source of income is a Social security benefit, he or she is likely not a good candidate for long term care insurance. People with significant assets may want to buy a long-term care insurance policy to preserve those assets. Others may choose to buy long term care insurance to pay for their own care and not burden others with nursing home bills.
People should not buy a long-term care policy if they cannot afford the premium now or in the future. The NAIC Shopper’s Guide to Long Term Care Insurance contains fact finding tools that may assist you in assessing a clients’ insurable needs or financial objectives.
Life Insurance Accelerated Death Benefit Riders for Long-Term Care
A rider attached to a life insurance policy that accelerates death benefits to cover long-term care expenses is a common approach to help clients meet their long-term care needs. These riders are subject to many laws and regulations that apply to “stand-alone” Long Term Care policies. In some states, this includes but not limited to:
- LTC replacement regulations;
- Suitability requirements and Shopper’s Guides;
- Special advertising laws and regulations, including the requirement that all LTC advertising be filed and approved in most states;
- Requiring a health and/or LTC license and continuing education requirements;
- Companies and agents must meet HIPAA privacy requirements;
- Make certain you’re aware of all of the LTC laws and regulations in each state you write business.