Like millions of Americans, Ron cares about the future and protecting his family.  The New Yorker is one of the 60 percent of Americans who possess life insurance to benefit his family should he die during his working years.  Now that he’s getting closer to retirement and his children are grown, he’s taking advantage of a little known tax provision that protects against the risk of living a long life according the director of the American Association for Long-Term Care Insurance.

“Americans have billions of dollars of single purpose life insurance purchased in their 30s, 40s and 50s have protection that no longer really serves the intended objective,” explains Jesse Slome, director of the national long-term care insurance association.  “Now as they approach retirement, the real risk to their family and loved ones results from living a long life and the financial and care-giving consequences of needing long-term care.”

Slome was speaking to leading insurance professionals sharing a real example of just such a scenario.  “We received an inquiry from a husband who is 55 years old today (2018), who we’ll call Ron (name changed for privacy),” Slome shared.   ”Over the past 25 years he purchased four different whole life insurance policies as a way of protecting his family and accumulating some cash value for his eventual retirement.”

Presently, the combined value of Ron’s life insurance death benefit was $1.2 million and his total cash value was $320,000.  Each year he paid $9,900 in premiums to maintain the coverage.  He had no long-term care insurance plan for himself or his wife and wanted information.

“Today, there are significant reasons that individuals with significant life insurance policies should investigate the benefits of a 1035 exchange,” Slome shared before referring the individual to a specialist knowledgeable in 1035 exchanges.   ”The greatest benefit is exchanging from a single-purpose policy (one that pays only a death benefit) to a dual-purpose policy (one that can pay the death benefit as well as provide long-term care insurance benefits).   In addition because people are living longer, today you can typically get increased death benefits for the same premium cost.”

Utilizing the IRS-approved 1035 exchange strategy, Ron’s four policies were converted into a single new paid-in-full (paid-up) life insurance policy with a $1,850,000 death benefit (a 54 percent increase)  In addition, the $320,000 of cash value was enough to pay the premium for the rest of his life (no future $9,900 yearly payments).

The new dual-purpose life plus long-term care policy (also often referred to as a linked-benefit LTC policy) included a rider that allows $50,000 in monthly long-term care benefits should Ron need care prior to his death.   The monies paid out would reduce any future death benefit and would last as long as funds are available.  A separate new dual-policy was purchased for his wife.

“While the $50,000 seems high in terms of today’s care costs, there are two things to keep in mind,” Slome points out.  “If he needs care and monthly costs are less, the balance remains for his future benefit.  But, since it’s likely that care won’t be needed for another 30 or 35 years when monthly costs will surely be much higher so the larger amount is planning ahead.”

“Using a 1035-exchange for a new dual-purpose life policy achieved a 54 percent increased death benefit, the availability of a monthly long-term care benefit of as much as $50,000 plus the elimination of the $9,900 yearly premium cost,” Slome summarized.  Taking advantage of 1035 exchanges is smart planning strategy today for a real risk in the future.”

Access the Guide To 1035 Exchanges

Slome is the author of the Guide To Long-Term Care Planning Using 1035 Exchanges which can be accessed for free on the American Association for Long-Term Care Insurance’s website.

The American Association for Long-Term Care Insurance advocates for the importance of long-term care planning and helps consumers connect with knowledgeable professionals who are independent advisors.

Consumers looking for local long-term care insurance agents or cost comparisons should visit the Association’s website at www.aaltci.org or can call the organization’s national headquarters at 818-597-3227.

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“We have seen a marked increase in the number of young men and women calling for and requesting online information pertaining to long term care insurance,” cites Jesse Slome, executive director of the American Association for Long Term Care Insurance.  The industry trade group was established to provide educational information to consumers and connect those seeking costs with knowledgeable long term care insurance professionals.

“The ideal age to learn more about long term care insurance is your mid-50s,” Slome explains.  “That is when you are most likely to be able to health qualify for this protection and premiums also are still highly affordable.  Waiting until after age 65 often results in a decline due to health or significantly higher costs.”

Over the past 60 days the Association reports receiving a significant increase inquiries by Millenials.   This is the demographic cohort with birth years from the early 1980s to the early 2000s.  “It’s true that accidents among young people can result in the need for long term care but the risk is extremely small so the increase in interest was a bit perplexing,” Slome notes.

Conversations with many of the younger individuals revealed a general lack of understanding regarding long term care and a confusion between this form of protection and traditional health care.  “The good news is that younger people are seeking information and for the Affordable Care Act to be successful, younger people will need to participate,” Slome adds.  “Planning starts with education and awareness so this all represents a very positive step.”

The Association’s director noted staff would be on hand to answer inquiries and to help individuals seeking long term care insurance costs and costs comparisons.   For additional information call the organization at (818) 597-3227 or visit their website at www.aaltci.org.   The organization does not sell insurance nor recommend specific long term care insurance companies.

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“Unpaid caregivers provide $450 billion worth of care every year to someone who is ill, disabled or aged,” declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the national long term care insurance industry trade group.

“Caregiving for a family member today is almost a requirement unless you have the savings or assets to pay for outside help,” Slome explained.  “People wrongly believe that Medicare pays for the type of care which is called long-term care but the reality is that Medicare pays very little of the cost and Medicaid is a severely impacted welfare program for the poor.”

The national long term care insurance expert pointed to a just published study ‘Retirement Care Planning The Middle Income Boomer Perspective” that surveyed adult caregivers between the ages of 49 and 67 with household incomes of between $25,000 and $75,000.   The study found that caregiving cost more than expected, impacted their existing relationships and took a more physical toll than previously thought.

“The reality today is that more Americans will live into their 90s and 100s than ever before and very few have any plan in place for living to 100,” Slome declared.  “We call today for heightened education and awareness as an important first step to addressing the problem that is facing millions of families.  Without a solution, families will pay the heaviest price as will taxpayers who will be expected to foot the bill for the neediest who require care.”

“People need to understand that there are only three options when care is needed,” Slome adds.  “Turn family members into caregivers, pay for outside care from your savings or convert assets, or have some long term care insurance to pick up some of the costs.”  The executive noted that insurance is only a viable option for those who can health qualify for coverage.

“Insurance companies need to keep long term care insurance costs as low as possible so they only will offer coverage to those who are in relatively good health when they apply,” Slome explains.  “We hate having to tell people with health issues or those who wait until their 70s or 80s that insurance is probably not an option for them.”

The Association urged individuals between ages 50 and 70 gain a greater understanding of the risks and costs.  The organization makes available free online consumer guides to long term care insurance planning and costs.  For additional information or to request long term care insurance costs and information connect with a designated long term care insurance specialist who is a member of the Association by calling the organization at 818-597-3227 or visiting their website.

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long term care insurance guide for women on their own

planning.  The guide will be available beginning later this week, AALTCI announced.

“Women face a significant risk of needing long term care and actually receive 66 percent of all long term care insurance benefit dollars paid out yearly,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance.   The head of the national trade group just authored a new consumer planning guide for the millions of women on their own.

“There are millions of women between the ages of 50 and 65 who are single, divorced or widowed,” Slome noted.  “They not only face a great risk of needing care one day but lack the built-in caregiver of a spouse and many don’t have adult children they can call on if a need for care occurs.  Planning is so important for women, but we believe it is especially important for the category we refer to as women on their own.”

The new guide was produced by the Association to help insurance professionals reach out to prospects in light of pending higher insurance costs for women recently announced by several leading long term care insurance companies.  “Women will start to pay more for this important protection with some states implementing the rate increases in April,” Slome reports.  “The window is closing for women to lock in the lower unisex rates still being offered by some insurers, but that will likely end at some point this year.”

The new guide is available in electronic format allowing insurance professionals to attach copies to emails, post on their websites and offer via blogs and other media.  Guides are personalized with the agent’s contact information, photograph and other personalization.

The American Association for Long-Term Care Insurance focuses on educating both consumers and insurance professionals.  The new guide is available exclusively to members of the organization and can be viewed via the organization’s member benefits section.  The cost for personaliuzed versions of the guide will be $35, a one-time charge.

For additional information visit the organization’s website or call the national organization at 818-597-3227.

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“As Americans live longer lives, it is more vital than ever for families to address vital issues including long term care planning,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance http://www.aaltci.org.  The national trade group established November as Long Term Care Awareness Month in 2001 with the goal of encouraging discussions between generations.  “Even a few minutes to cover some key issues can avoid years of family stress and angst,” Slome notes.

The Association’s studies have found that too few families discuss the issue prior to the time when an actual need for care arises.  “There are a multitude of topics such as making an elderly family member’s home safer to avoid falls,” Slome notes.  “An elderly person’s preference for location of care is also essential as some wish to remain at home while others might prefer to move in with an adult child.”

Some eight million American seniors now own long term care insurance according to the Association.  “I often refer to it as the ‘silent purchase’ because few aging parents tell their adult child they have this protection in place.”

Should an aging parent need long-term care, they might not be in the physical or mental condition to tell their family member about the insurance policy which would provide benefits.  “We do get calls from family members who find policies years after their parent has passed away and wonder if they can collect any benefits,” Slome adds.  “Regrettably, at that point it’s too late.”

Slome urges families who have purchased LTC insurance to discuss where they keep such records with their adult children.  “Thanksgiving is a time to enjoy being with family,” Slome adds.  “But a few minutes of serious conversation will not interfere with the celebration and can avoid so many costly and emotionally devastating problems down the road.”

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An estimated 5.1 million Americans have Alzheimer’s disease according to the American Association for Long-Term Care Insurance,  Every 72 seconds someone develops Alzheimer’s which is the leading and most costly long-term care condition. 

The long-term study completed by researchers at New York University tracked 213 adults with and without SCI over an average of seven years, with data collection taking nearly two decades. Further cognitive decline to MCI or dementia was observed in 54 percent of SCI persons, while only in 15 percent of persons free of SCI. 

Experts note that this is the first study to use mild cognitive impairment as well as dementia as an outcome criterion to demonstrate the outcome of SCI as a possible forerunner of eventual Alzheimer’s disease.  The findings indicate that a significant percentage of people with early subjective symptoms may experience further cognitive decline, whereas few persons without these symptoms decline. If decline does occur in those without SCI symptoms, it takes considerably longer than for those with subjective cognitive symptoms. 

Scientists and physicians can now target the prevention of eventual Alzheimer’s disease in the SCI stage, beginning more than 20 years before dementia becomes evident.

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“Women have a far greater risk of needing long-term care and indeed two-thirds of all long-term care insurance benefits result from care needs by women,” explains Jesse Slome, executive director of the national trade organization.  “Women also tend to be the ones who initiate the long-term care planning discussion and often are the decision maker when it comes to purchasing long-term care insurance.”

Women over the age of 65 comprise 980,000 nursing home residents in the U.S., according to the “Woman’s Guide To Long-Term Care Insurance Protection.”  Only 337,000 men over age 65 are in nursing homes.  Women are far more likely to suffer from Alzheimer’s Disease that is the cause of the largest and most costly needs for long-term care.   “Women benefit more from owning long-term care insurance,” Slome notes.  “Two-thirds of all insurance benefits are paid to women, 41 percent to single women and 25 percent to married women.”  Single men account for 12 percent of claim benefits and married men for 22 percent.

The guide addresses important planning considerations for women who have spouses or partners as well as women who live alone.  “Each have very specific planning needs and issues,” Slome explains.  “Married women face a likelihood of providing care for their spouse, who typically is older, or facing a very significant annual bill for care.”  Women who live alone lack the spouse or extended family members to assist with caregiving.

Copies of the guide can be viewed on the American Association for Long-Term Care Insurance‘s website and may be purchased by insurance and financial professionals.  To view a copy go to: http:www.aaltci.org/tools or call the organization for information at 818-597-3227.

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Research conducted by the American Association for Long-Term Care Insurance (AALTCI), the national trade organization, examined 2007 sales data from 10 leading insurers to determine the percentage of long-term care insurance applicants who qualified for preferred health discounts as well as the percentage who did not qualify for insurance as a result of an existing health condition.

“Individuals mistakenly think long-term care planning is something that can wait until after retirement, but because of health changes that tend to occur in our 50s and early 60s, the facts shows otherwise,” explains Jesse Slome, the Association’s executive director.  “Between one-fifth (20%) and one-third (33%) of individuals who submitted an application for long-term care insurance between ages 60 and 69 were declined coverage because of an existing health condition according to the biennial study.”  The industry average for declined applicants between ages 60-to-69 was 22.9 percent.  For ages 50-to- 59 it was 13.9 percent.

While insurers can decline individuals who apply for coverage with existing health conditions, most reward those who apply while in relatively good health.  “Just over half (51.5%) of individuals who applied and were accepted for coverage last year between ages 50 and 59 qualified for “preferred health” discounts,” Slome acknowledges.  These discounts can reduce the cost of long-term care insurance by 10 to 20 percent each year.  “The savings can amount to hundreds of dollars a year for a couple,” Slome notes, “and they won’t be taken away in the future should your health change.”

Some eight million Americans currently have long-term care insurance protection on an individual basis or through their employer, according to the Association’s 2008 Sourcebook data.  “Some 400,000 people obtained coverage in 2007,” Slome states, “and 83 percent of individuals purchased before age 65.  But, clearly, many people still wait too long to start the planning process only to discover they can’t get coverage no matter how much they are willing to pay.”

More Applicants Qualify For Good Health Discounts

The number of individual applicants who qualified for good health discounts in 2007 rose slightly for most age-bands compared to the Association’s 2005 study.  “Just over two-thirds (66.8%) of applicants between 40 and 49 qualified for the discount in 2007, compared to 53.7 percent in 2005.
“Planning for long-term care is similar to retirement planning,” Slome explains.  “There are significant advantages and reasons to start early.  Your health when you apply is probably the most important.”

It is important to understand that each insurer establishes it’s own criteria for acceptable health conditions.  Likewise discounts and insurance rates can vary quite significantly based on your age, your marital status and health.  “It pays to speak with a knowledgeable long-term care insurance professional who can offer coverage from more than one insurer,” Slome advises.  “The difference in cost can be as much as 30 percent or more annually and since it rarely is advantageous to change policies, it pays to get the best coverage for the best price from the onset.”

For smokers or those individuals whose health is less than perfect, begin the planning process with a long-term care specialist who understands which specific health conditions various insurers will accept.   “They’ll want to know what medicines you have been prescribed, even if you don’t take them, and any current conditions before recommending you submit an application to a specific insurer,” Slome notes.  “No one wants to hear they are declined, especially because once you are declined by one insurer, you may find it harder or possibly impossible to get coverage from another.”

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“Long-term care insurance becomes an increasingly attractive planning option when people understand they can’t rely on government programs or their retirement savings should they need long-term care,” said Jesse Slome, Executive Director of the American Association for Long-Term Care Insurance.  The Association compiled data to be published as part of its 2009 Sourcebook.

Ten States With Most Insureds
According to the Association data, the following states have the most residents with long-term care insurance.  “California has over 550,000 people with coverage followed by Florida (about 450,000) and New York (400,000),” Slome notes.  “Alaska, with over 670,000 residents has 5,000 people with coverage, the lowest in the nation.”  Hawaii has about twice the population but some 63,000 residents have long-term care insurance in place.

The top-10 states with residents owning long-term care insurance according to the Association’s 2009 LTCi Sourcebook are:

1. California  6.  Pennsylvania

2. Florida    7.  Ohio

3. New York    8.  Missouri

4. Texas      9.  New Jersey

5.  Illinois    10. North Carolina

Some States See Double Digit Growth
While sales have grown modestly, the Association reports that the number of insureds has grown significantly in certain states.  Data from the most recent state insurance filings reported in the Association’s 2009 Sourcebook note that the number of policyholders grew fastest in Arizona (+ 25.2%) followed by Florida (17.8%).

The states reporting the greatest increase in the number of residents owning long-term care insurance according to the Association’s 2009 LTCi Sourcebook are: (number in bracket represents percentage increase from the prior year’s State filings).

1. Arizona (25.2%)  6.  Missouri (14.4%)

2. Florida (17.8%)  7.  Oklahoma (14.4%)

3. N. Carolina (17.0%)  8.  Louisiana (13.7%)

4. Maine (15.6%)   9.  Massachusetts (13.3%)

5.  Kansas (14.4%)      10. S. Carolina (13.0%)

The American Association for Long-Term Care Insurance (www.aaltci.org) is the professional organization serving both insurance and financial professionals as well as educating consumers nationwide.   The Association publishes the annual Long-Term Care Insurance Industry Sourcebook a compendium of relevant industry data.

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