Long Term Care Insurance Isn’t Dead. It’s Now an Estate-Planning Tool

Long term care insurance policies started to see a rise in sells in the 1990’s mostly in the middle American income bracket. These consumers were those that were at risk of draining their savings accounts, leaning on their children, or figuring out a way to qualify for Medicaid if they were hit with dementia or a high-cost medical condition in their later years.

The sales pitch has changed, however, to reach wealthy Americans who want to use long term care insurance policies to protect their larger estates from having to be in any way depleted because of failing health. Even 7-digit nest eggs can be hit hard by the astronomical costs of medical expenses.

“According to federal government projects, about a quarter of Americans turning 65 between 2015 and 2019 will need up to two years of long term care. 12% will need two to five years, and 14% will need more than five years.” These costs could increase exponentially if the patient needs round the clock care by an in-home provider or decides to reside in a nursing home facility.

Insurance companies have also implement hybrid policies that will pay out death benefits if the long term care is not used or not completely expended. Some policies have also introduced a “return of premium” feature, which allows buyers to recoup much of the money they have paid into the plan, albeit without interest.

See Leslie Scism, Long-Term-Care Insurance Isn’t Dead. It’s Now an Estate-Planning Tool, Wall Street Journal, June 9, 2018.

Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.