COLLEGE PLANNING | ESTATE PLANNING | INSURANCE | INVESTING | PORTFOLIO SPOTLIGHT | REAL ESTATE | RETIREMENT | TAX PLANNING

But skeptics say it ’ s too soon to cheer .

By Ben Mattlin

But for providers of long-term-care insurance ( LTC ), the story is never quite that simple . “ There has never been a greater need for long-term-care planning ,” says Ken Latus , vice president of risk products at Northwestern Mutual , a leading provider of LTC coverage , in Milwaukee .

Latus cites the aging population , the rapidly growing number of people entering their retirement years and the rising costs of care . Indeed , there are few alternatives to LTC insurance — privately paid coverage for at-home or nursing-home care for those unable to perform certain standard activities of daily living . Regular health insurance and Medicare may provide temporary rehabilitation assistance after somebody suffers a severe injury or illness , but they don ’ t provide extended custodial aid . Medicaid might , but you have to be impoverished to qualify for it .

But long-term-care insurance has its own disadvantages . For many people , it has become too costly . “ Several of my clients have experienced increases in their long-term-care premiums in recent years , some as high as 30 % or greater ,” says B . Kelly Keydel , a managing director at Wealthspire Advisors in Seattle . “ Along with increases in premiums , reduced benefits have also been offered as a way for clients to maintain affordable premium payments .”

In some cases , she adds , this combination “ made the policy not worth keeping .”

Thomas West , a senior partner at Signature Estate & Investment Advisors in Tysons Corner , Va ., is not optimistic that current conditions will help much . “ Higher interest rates can hypothetically improve the overall stability of the LTC insurance market ,” he says , “[ but ] I ’ m not convinced that the risks to insurance carriers are actually lower .”

Tightening Underwriting Standards

Some LTC insurance providers have also raised their acceptance threshold for new policies , disqualifying anyone judged too unhealthy as a bad risk . Those strictures , however , may be easing .

“ We ’ ve seen a couple [ of ] carriers loosen the restrictions if an applicant ’ s family member had dementia or memory loss , [ and ] one carrier that also increased what a person ’ s A1C can be if the rest of the health and build were within the guidelines ,” says Brian Gordon , president of Gordon Associates Long Term Care Planning in Bannockburn , Ill . ( A person ’ s “ A1C ” is a measure of average blood sugar and is a standard diabetes metric .)

Rising premiums and tightening underwriting standards “ were largely generated by the carriers ’ [ incorrect ] predictions ,” says Aaron Schindler , president of Care Concierge NY in New York City . “ Low interest rates were not the cause .”

52 | FINANCIAL ADVISOR MAGAZINE | JUNE 2023 WWW . FA-MAG . COM