By Michael Kalen

When it comes to the top concerns of retirees and those facing retirement, the number one thing that worries people is retirement income, and number two is the cost of health care. The cost of healthcare continues to rise, and while Medicare and group insurance provide medical and hospitalization coverage, they don’t cover the cost of extended or critical care, nursing homes or assisted living – things that can wipe out retirement savings for surviving spouses, and wealth transfer for children and grand children.

That’s where long-term care coverage comes in. We know the options, but why has Asset-based LTC become the leading choice for financial planners to solve the problem?

There are five options for clients. Here are the pros-cons:

Traditional long-term care insurance has skyrocketed, and customers lose the benefit if they don’t need the coverage. This is where asset-based hybrid products come in. Here’s how it works: If you pass away before you need the long-term care benefit, a death benefit is paid to your named beneficiary. And if you do need the long-term care coverage, you typically get three to five times the premium in benefits, especially if you buy early. 

Covr is the first advisory firm to offer a fully integrated, online, multi-carrier tool to simplify the comparison of benefits and streamline the application process.  Covr’s LTC estimator tool can show real-time, dynamic comparisons, so advisors can more easily pick which product is the best for their clients’ needs. 

These hybrid products have been the fastest growing tool to address these costs over the last decade, as they offer significant benefits in an affordable and flexible way. According to data from the LIMRA Secure Retirement Institute, total sales were 260,000 last year for a total of $2B in new sales. There is a growing number of well-known and stable companies who are offering these products, including Lincoln, Nationwide, Pacific Life, OneAmerica, Securian and Brighthouse. However, despite this growth, many consumers still don’t have a solid understanding of the alternative options now available, according to Forbes research. 

Furthermore, as outlined in the LIMRA report “Combination Products: A One-Stop Solution?,” consumers in general have a negative opinion of stand-alone LTC insurance, making hybrid products a more viable option to pitch to many clients.

Keep in mind as you’re selling hybrid LTC that, the younger the person is when they buy in, the better. If you have clients in their 50s with money that’s earning a low rate of return, it’s essential to show them this option.  

Often we see advisors struggle because  while traditional long-term care is still a viable option, those premiums can go up dramatically over the life of the product, often scaring clients away as the premiums are not locked in. Traditional LTC products were developed when life expectancies were shorter, and fewer people needed coverage. Now, people are living much longer, which increases the chances of needing some type of long-term care. Combined with the rise of dementia and other cognitive impairments among the aging population, many people need care for a longer time period. 

Adding to peoples’ hesitation to buy is the fact that, with traditional LTC, should long-term care not be necessary, that money is gone. 

Now, let’s get into some specifics about hybrid LTC. Let’s say you have a client with $1,000,000 in liquid assets and $200,000 of low growth assets, such as CDs, cash or life insurance cash value.  A typical 55-year-old client could use one-third of the low performing assets to create a four to five times leverage in LTC coverage. This means that, for $70,000, a 55-year-old client can create $350,000 of long-term care coverage, while keeping 100 percent of their premium liquid and available for emergencies if needed – and have a small return on their deposit and a death benefit.  Of course, each client brings a unique set of circumstances that will need to be discussed. 

It’s an exciting time in the insurance industry, and Covr is leading the way in simplifying life insurance and LTC for you and your clients . Contact us today for a demo of the LTC estimator, and learn how we can help you help your clients. 

About Covr Financial Technologies

Covr is a digital life insurance platform that simplifies, grows, and manages the life insurance business. Covr partners with financial institutions that share the belief that life insurance should be both simple and transparent. Through Covr’s technology, financial advisors and their clients can research and purchase affordable life insurance from well-known insurance companies without the hassles of the traditional process – all within a matter of minutes. Covr’s investors include four leading venture capital firms: Nyca Partners, Commerce Ventures, Connectivity Capital Partners and Contour Venture Partners. The Covr Advisory Board includes several well-recognized leaders in financial services and insurance, including Chairman Brian Finn, former president of Credit Suisse First Boston; Sallie Krawcheck, CEO and co-founder of Ellevest as well as senior executive roles at Bank of America, Citigroup and Smith Barney; Hans Morris, managing partner, Nyca Partners, chairman of Lending Club, formerly president of Visa; Brady Dougan, former CEO of Credit Suisse. Covr has offices in Boise, ID and Hartford, CT. 

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