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Wednesday, November 12, 2014

What’s new with today's LTCI?

Long term care insurance is a continually evolving product, and new features improve today’s policies compared to those five or ten years ago.

There are several factors that changed LTCI over the years; one of which is the decrease for its demand which required it to adapt to the needs of the consumers.

Another factor is the number of carriers offering LTCi. Within the last decade, there were over 100 insurance companies offering this policy, but today, it’s down to around 20.

Here are practical changes applied to new LTCI policies:

1. Hybrid LTCI Policies
LTCI policies today are paired with benefits that are normally obtained from different types of insurance such as life insurance. Another form of this type of hybrid policy is life insurance with LTCI benefits.
Some of these hybrid policies are designed to provide coverage for the need which is at high priority at the moment or whichever is preferred by the policyholder.
These policies are also equipped with a transferrable benefit feature which passes the total remaining value into the life insurance benefit if the LTCI benefit was partially or never used.

2. Guaranteed Purchase Options
Old policies were written in a way that it would become absolute and cannot be adjusted anymore. It had high restrictions which became unattractive for consumers.
LTCI policies today have the feature ‘guaranteed purchase options’ which allow the policyholder to make future adjustments that can affect the coverage or premium.

3. Need-based Policies
LTCI policies in the past were sold with 100% of the estimated future care costs of the consumer.
Today, consumers are presented with the good/better/best options to suit their preference, minus the benefits that they won’t need and at a more reasonable rate.

Over the years, insurance companies have been applying changes to their LTCI policies, based on the consumers’ preference and needs. Most changes are influenced by economic pressures on both insurer and consumer. Other influences involved the most common need of consumers, namely, home health care.

One thing we can be sure of is that the LTCI policy our parents or grandparents own will not be the same with the current policies available today.