Message from Tobe:
“What happens if my LTCI company goes insolvent?” This question comes up more often than you might expect. Most of us remember 2008, so we may find ourselves paused for an echo when we consider some of the more recent distressing financial news.
The article “Weathering Any Storm” appeared in the most recent issue of CLTC Digest (Quarter Two 2023*) and is an excellent treatise on how guaranty associations work to protect policyholders should a predicament surface that needs to be responded to. While insurance company insolvencies are few and far between, consumers can turn to their state’s life and health insurance guaranty association as a safety net if their LTCI company becomes financially unstable.
“Q & A” of the Month:
Q: I’m an estate and elder law attorney. I work with clients of all ages. Most recently, a 77 year old female client asked me about purchasing LTCI. She said that her children would like her to have a policy and they will pay for it. Is she too old to purchase a policy?
A: While your client is not the ideal age for purchasing LTCI, if she is in good health both physically and cognitively, she should be able to secure a policy. It would be important to mention that it will be expensive to purchase a policy at her age because actuarially she is fairly close to the average age of claim. Even a small policy with a monthly benefit of $6,000, a 3 year benefit duration, a 90 day elimination period, and no inflation would cost around $10,000/year.
Yours in success,
— Tobe Gerard