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A new perspective on life and long-term care insurance

By: Jodi Allen, Regional Sales Director, Mountain Region

Sadly, none of us are getting any younger. Maybe you see it in the mirror every morning, or in your parents or the incredible impact that aging can have on finances. So, if aging is inevitable, and if it poses risks to a person’s finances, why are so many underprepared, and what can they do to fix it?

I believe there’s a simple solution. A universal life insurance policy with long-term care benefits provides coverage for some of the most costly parts of aging. It’s a policy you can use during life and protects your family until the end. Universal life with long-term care benefits is, in many ways, insurance for aging. And until someone discovers the fountain of youth, I strongly believe brokers should be talking about life insurance with long-term care benefits, employers should be offering it and employees should be considering it.

The need for life insurance protection

The life insurance gap in the United States sits at $12 trillion.1 While that stat speaks for itself as to how many people are underinsured in terms of life insurance, it doesn’t spell out the impact of this gap. That is $12 trillion in mortgage payments, college tuition for children and groceries that families would need when a wage earner is no longer in the picture.

On top of that, far too many people are unaware of their predicament. As we’ve discussed, aging is inevitable and while some have life insurance through their workplace, they lose that coverage when they retire. Even if they have sufficient protection, “losing” that coverage when they retire or change jobs will make them part of the ever-widening life insurance gap.

The need for long-term care protection

Long-term care costs a lot. So much so, in fact, that more than six in 10 nursing home residents are being covered by Medicaid.2 Medicare wasn’t intended to cover long-term care so as people’s funds become depleted they likely need the support of Medicaid for their care. That’s no surprise since in 2016, the typical annual cost of nursing home care was $82,000, which is three times the annual income of most seniors.2 And by the way, it affects more than just the most elderly people in our communities. At Trustmark, 75 percent of our long-term care claims are for people under the age of 65. 

Long-term care insurance is an option, but consumers face two major problems in this market. One, is that the number of carriers offering long-term care insurance has dipped significantly in recent years. This is likely in large part due to the costs of care and the growing aging population. 

This is tied to the second challenge for consumers in the long-term care insurance market; the increase in cost. The premiums on these policies have increased significantly as the options for insurance have decreased. The costs of care have risen for customers and insurance companies alike. On top of all that, though long-term care insurance is worthwhile, there is always a chance that the policyholder will never use the benefits. Consumers need options for protection, but a stand-alone product presents its own set of challenges.

Universal life insurance + Long-term care benefits = aging insurance

A policy combining life insurance and long-term care makes sense to cover both the need for long-term care and for life insurance. For someone looking at a long-term care policy, the death benefit ensures they get some value from the policy if they don’t need the long-term care benefits. On top of that, it’s a pragmatic solution as the options for long-term care insurance shrink and the costs rise. On the other hand, the life insurance benefits can help to cover the life insurance gap in a policyholder’s coverage and provides permanent protection as well as more options for benefits they can use during life. In short, it’s like having two policies in one.

Our aging population is growing; it’s estimated that by 2050, there will be 88.5 million Americans over the age of 65.3 Every single employee faces two inevitabilities: they are going to grow older and they are, eventually going to pass away. Life insurance with long-term care benefits covers for both of these certainties. It is, in effect, aging insurance, and given the fact that we will all age, that makes it indispensable.

So why not talk about it? Why not offer it? If you don’t, I’m pretty sure someone else will. 

1 4 Ways to bridge the $12 trillion life insurance gap. ThinkAdvisor. Feb., 2017.
2 Medicaids Role in Nursing Home Care. Kaiser Family Foundation. June, 2017.
3 Administration on Aging, “Projected Future Growth of Older Population, “U.S. Department of Health & Human Services.

Posted on December 07, 2017 in Life Insurance

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