RetirementGuardian Offers a Smart Alternative to Long-Term Care Insurance

CHANDLER, Ariz.--(BUSINESS WIRE)--Today there are 79 million Americans age 45 to 64, and over 40 million 65 or older, yet only 8 million own long-term care insurance.

“The number one concern of potential buyers”

Why the disconnect – especially considering the yearly cost of facility care today averages $80,000 and is increasing faster than the rate of inflation?

“The number one concern of potential buyers,” said Robert Davis, president of RetirementGuardian.com, an independent agency specializing in asset-based long-term care insurance, “is the idea of paying for coverage they may never need.”

In response, the industry has introduced new products combining life insurance or annuities with long-term care benefits.

These linked policies – also known as asset-based plans or hybrids – are gaining in popularity. According to Limra, an association of insurers, sales of hybrids increased 34 percent in 2009, the latest figures available.

And that popularity is increasing thanks to a new tax law which became effective last year. This legislation offered tax advantages to linked-benefit policyholders. “Plus, if you own an old life or annuity contract, now you can exchange it tax free for a new one with long-term care benefits,” said Davis.

So what is a linked-benefit policy and how does it work?

Basically there are two types. The first, called an accelerated-benefit plan, generally consists of a life insurance policy with an optional rider. The rider – which adds five to 15 percent to your premium – allows the payment of a portion of your death benefit (usually two to four percent per month) for chronic care. However, if you never need care, the entire amount goes to your beneficiary when you die.

“We call it either-or insurance,” said Davis. “Either you get the money while you’re alive or your family gets it when you die.”

The second type, called a linked-benefit plan, is designed for those who’ve decided to self insure – that is, pay for long-term care with their own money if they ever need it.

According to Davis, there are three important differences with linked-benefit plans. “First, you fund the policy with a single premium versus the pay-every-year approach. Second, there is an added pool of long-term care coverage above and beyond the death benefit. And third, most carriers offer a money-back guarantee.”

“We call this self insuring the smart way,” Davis said. “It’s usually as easy as moving an asset you’ve already earmarked for an emergency from the bank to an insurer.”

One advantage common to both is your premium is guaranteed never to increase. “This is important especially in light of all the substantial rate hikes we’ve seen on traditional policies lately,” said Davis.

“And don’t overlook that all proceeds paid – whether for chronic care or as a death benefit – are tax free,” stated Davis.

Hybrids come with tradeoffs and aren’t for everyone. “But we now have a viable, tax-favored alternative to traditional long-term care insurance,” concludes Davis.

To learn more or receive quotes: http://www.retirementguardian.com