Voluntary Benefits
Published by Ali Johnson on March 18th, 2021
The need for long-term (LTC) care is high and the options for finding help to fund care are low. That’s not particularly new or groundbreaking information for many of us tuned into the healthcare and insurance world. It’s a huge problem and one we desperately need to address. But, it’s also a well-covered topic.
In that spirit, I’d like to dive a little deeper since, if we really want to help solve what looks like a looming care crisis, there won’t be any easy answers. While shrinking options and the growing need is a well-tread topics I’ll take a closer look at some nuances the insurance world needs to account for when addressing long-term care.
Permanent and non-permanent care
My colleague Adam Bezman took a deep dive into this topic, but it’s worth noting here as well; we need to account for both permanent and non-permanent care. Today, some of the insurance solutions on the market only offer long-term care support if the need is permanent. This sells the policyholder short for a couple reasons:
The “inverted triangle” – formal and informal care
It used to be that the population was a triangle with a wide base. By which I mean, there were many young people and, gradually as you moved up in age (70’s, 80’s) the number of people got smaller. That trend is changing. A 2018 study predicted that by 2028, there would be more people over age 65 than there are people under age 18.1 In this sense, that triangle is becoming inverted – the wide base will soon be at the top.
What does this mean for long-term care? Well, it could mean a couple things. First, it could mean that the cost of care will only increase as there will be higher demand and, potentially, lower supply for care. And, with that, the need for financial support from insurance will increase as well.
This also means that there may be an increased need for informal care for family members. Today, nearly 1 in 5 (19.2 percent) of Americans are providing unpaid caregiving to an adult.2 It’s time for companies to start looking at informal care, the costs associated with that care and how to support employees giving and receiving care.
Dollars and cents
I mentioned it above, but, the costs for long-term care have been increasing and seem likely to increase. Today, the median cost of in-home care is roughly $4,500 with significantly higher costs for a nursing home.3 Premiums on standalone LTC policies have also gone way up (where you can still find them at all). Which leads to the inevitable question of dollars and cents: how do we make care solutions affordable? I’ve seen some interesting tools for care management and care planning which can help, but I think one of the most effective tools is bundling long-term care with a life insurance product.
If I may put on my sales hat here for a minute, that’s the reason why Trustmark's Universal LifeEvents with long-term care product is so appealing. It combines life insurance and long-term care. More than that, it reduces the death benefit on the policy in a policyholders later years (care benefits remain unchanged). While, that does match the needs of the policyholder, the truth is, it makes long-term care benefits affordable, which is just as important in our current environment. It’s up to carriers and brokers to keep pushing the envelope on innovative products like this to meet consumer needs.
We need long-term care solutions, but more than that, we need the right long-term care solutions to tackle this growing challenge. I think there’s agreement on the issue, but hopefully looking closer at some of the nuance of the problem can help to shape exactly what we, as an industry, will do about it.
1 The Caring Company. Harvard Business School. 2018.
2 Caregiving in the U.S. – 2020 Report. AARP. 2020.
3 Genworth Cost of Care. 2020.
In that spirit, I’d like to dive a little deeper since, if we really want to help solve what looks like a looming care crisis, there won’t be any easy answers. While shrinking options and the growing need is a well-tread topics I’ll take a closer look at some nuances the insurance world needs to account for when addressing long-term care.
Permanent and non-permanent care
My colleague Adam Bezman took a deep dive into this topic, but it’s worth noting here as well; we need to account for both permanent and non-permanent care. Today, some of the insurance solutions on the market only offer long-term care support if the need is permanent. This sells the policyholder short for a couple reasons:
- Doctors today are able to treat patients to help move them from requiring care to being independent
- Many young people need care and, being young, expect to recover; at Trustmark 60 percent of our LTC claims are for people under age 65
The “inverted triangle” – formal and informal care
It used to be that the population was a triangle with a wide base. By which I mean, there were many young people and, gradually as you moved up in age (70’s, 80’s) the number of people got smaller. That trend is changing. A 2018 study predicted that by 2028, there would be more people over age 65 than there are people under age 18.1 In this sense, that triangle is becoming inverted – the wide base will soon be at the top.
What does this mean for long-term care? Well, it could mean a couple things. First, it could mean that the cost of care will only increase as there will be higher demand and, potentially, lower supply for care. And, with that, the need for financial support from insurance will increase as well.
This also means that there may be an increased need for informal care for family members. Today, nearly 1 in 5 (19.2 percent) of Americans are providing unpaid caregiving to an adult.2 It’s time for companies to start looking at informal care, the costs associated with that care and how to support employees giving and receiving care.
Dollars and cents
I mentioned it above, but, the costs for long-term care have been increasing and seem likely to increase. Today, the median cost of in-home care is roughly $4,500 with significantly higher costs for a nursing home.3 Premiums on standalone LTC policies have also gone way up (where you can still find them at all). Which leads to the inevitable question of dollars and cents: how do we make care solutions affordable? I’ve seen some interesting tools for care management and care planning which can help, but I think one of the most effective tools is bundling long-term care with a life insurance product.
If I may put on my sales hat here for a minute, that’s the reason why Trustmark's Universal LifeEvents with long-term care product is so appealing. It combines life insurance and long-term care. More than that, it reduces the death benefit on the policy in a policyholders later years (care benefits remain unchanged). While, that does match the needs of the policyholder, the truth is, it makes long-term care benefits affordable, which is just as important in our current environment. It’s up to carriers and brokers to keep pushing the envelope on innovative products like this to meet consumer needs.
We need long-term care solutions, but more than that, we need the right long-term care solutions to tackle this growing challenge. I think there’s agreement on the issue, but hopefully looking closer at some of the nuance of the problem can help to shape exactly what we, as an industry, will do about it.
1 The Caring Company. Harvard Business School. 2018.
2 Caregiving in the U.S. – 2020 Report. AARP. 2020.
3 Genworth Cost of Care. 2020.
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Written by Ali Johnson
Regional Sales Director, Great Lakes Region
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