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Message from Tobe:

What does it mean to be a burden?

I just finished a Zoom call with prospective clients who I will call Sally and Joe. Sally and Joe had taken care of Sally’s mother who had Alzheimer’s. They cared for her in their home for 10 long years. They were more than ready to purchase LTCI policies and spend over $10,000/year. Here is what Sally shared with me: “We will never do to our children what we willingly committed to do for our mother. We didn’t realize what it would be like, but we lost years and years of our lives providing the daily care that she required. It was overwhelming. It affected our careers, our finances, our health, but mostly the relationships with our own children and grandchildren because we missed out on so many important life events. While we don’t regret our decision, we realized that had she had a LTCI policy, the whole scenario would have played out very differently.”

There are so many things in life that we don’t want to miss out on. If we plan properly, we may be fortunate enough to be able to be there for many of those life events. My husband and I were able to be there for all of our daughter’s life events because we placed a value on showing up. If we move the time line forward, either one of us or both of us may need extended care in the future. By having LTCI policies, our daughter can administer our policies rather than having to provide hands on care. Without a LTCI policy, our daughter would be relegated to navigating a system that she wouldn’t understand, and inevitably providing more hands on care than she had signed up for. While there are a variety of reasons why people purchase LTCI, the one that is not stated often enough and loudly enough is that we don’t want to be a burden to our loved ones. An LTCI policy delivers a strong message and a rare gift when it is needed most.

What is the impact of the interest rate environment today in relation to the various LTCI products?

We have been getting a lot of questions lately about how the interest rate environment will affect LTCI pricing. I reached out to some of our carriers for their responses. I’ll share with you what has been shared with me by both the traditional LTCI carriers as well as the hybrid LTCI carriers.

The premiums on hybrid LTCI policies are guaranteed. Once a policy is in force, the premiums are locked in, but the rates for new hybrid policies can go up or down depending upon the interest rate environment. Interest rates started to climb in 2022 which allowed some of our hybrid companies to lower their premiums for new business. Our four main hybrid companies (Lincoln, Nationwide, OneAmerica, and Securian) all lowered their new business rates since the start of 2022, with some of these companies lowering rates more than once. While we don’t have a crystal ball, the general feeling is that if interest rates continue to rise, we may possibly see further premium rate decreases for new hybrid policies. On the other hand, if interest rates start to decrease substantially, we could see premiums climb for new hybrid policies. Now would be a great time to consider the purchase of a hybrid product.

The premiums on traditional LTCI policies are generally not guaranteed. At the present time, Thrivent has a 5 year rate guarantee on all traditional LTCI policies that they issue. National Guardian Life and Thrivent also offer accelerated payment options that can help clients ward off a future rate increase; National Guardian Life offers both a “single pay” and a “10 pay”, and Thrivent offers a “10 pay”. The LTCI companies that we spoke with were not unhappy that interest rates are now higher because interest rates impact future rate increases on in force LTCI policies. A long term upward trend in interest rates will help overall price stability. If interest rates continue to remain high, that could help to push off rate increases in the future. The carriers are hopeful that future rate increases on the business that we are writing today will not be as big a problem as the rate increases that have been experienced by clients who own older policies.

“Q & A” of the Month:

Q: My husband is 72 and I am 53. We have a daughter who is 25. My husband is in great health, but his father developed Dementia at around age 77. We are thinking about buying a policy just for my husband. My thought process is that it makes sense to wait until he starts presenting symptoms similar to what happened with his father. Does that make sense?

A: Absolutely not! Once someone starts “presenting symptoms” it is already too late. The time to buy a policy is now and without delay. We have found that people who apply in their 70’s get declined more often than people who are in their 50’s or 60’s. I would also ask why you are not considering a policy for yourself, especially where there is such a large age disparity? If you don’t have a policy of your own, it all falls on your daughter when the time comes that you may need care. I would definitely recommend considering policies for both of you and not just for your husband.

Yours in success,
— Tobe Gerard