Long-Term Care Insurance Marketplace Shrinks & Costs Rise for Aging Boomers

7:12 pm Asset Protection, Estate Planning, Retirement Planning

up and down e1333134610679 Long Term Care Insurance Marketplace Shrinks & Costs Rise for Aging BoomersA story yesterday in USA TODAY reported that as America’s largest demographic reaches the age when they need long-term care insurance, the market for that insurance is shrinking and the cost is growing.

Earlier this month, Prudential Financial – a top five provider –announced that they would exit the long-term care insurance market.  USA TODAY reports that with their exit, 10 of the top 20 long-term care insurance providers are out of the market.

As the marketplace shrinks, prices are rising.  Long-term care insurance premiums are now six to 17 percent higher than last year, according to the American Association for Long-Term Insurance.

Many people don’t like long-term care insurance since if you never use it, you lose the money you put into it.  This has led to a growing market for “hybrid” policies that require a large one-time payment, which can then either be used for long-term care or a life insurance benefit.  Although not everyone can afford to sink a big chunk of change into a hybrid policy, a New York Life Insurance spokesman said the sales of its hybrid Asset Preserver policy have risen steadily over the past three years.

In addition, Californians have access to a long-term care partnership program that allows residents to purchase enough insurance to cover the assets they want to protect.  The California Partnership for Long-Term Care is an alliance between the State of California and a select group of private insurers that provides long-term health care policies to allow you to keep a dollar’s worth of assets for each dollar your partnership policy pays out for long-term care, thus enabling you to still maintain your ownership of your assets.  In effect, you purchase a partnership policy that is equal to the amount of asset protection you want.

A partnership policy also allows you to pass assets to a spouse, children or other family members because it exempts protected assets from Medi-Cal Estate Recovery.

If you are concerned about long-term care costs, consult with an Orange County estate planning attorney about partnership policies and the asset protection these long-term care policies provide.

Contact us today for individualized planning strategies to meet your unique needs.

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