long-term care insurance

Winter 2023 Issue

Long-term care insurance – but what if I don’t need it?

By Tom Strangstalien, Insurance Advisor

We all know the risks of a long-term care event devastating our family’s finances as well as our mental and personal well-being. Roughly half of those who reach the age of 65 will require some form of long-term care assistance during their lifetime.

Read more…


Rising health insurance premiums

By Chris Noffke, GBDS, CSFS, Vice President of Employee Benefits

Health insurance premiums are constantly on the rise. According to the Centers for Medicare & Medicaid Services, “U.S. health care spending grew 2.7 percent in 2021, reaching $4.3 trillion or $12,914 per person.” Everyone from employees to employers are feeling the squeeze of high-cost premiums.

Read more…


Exercise your financial muscles to get financially fit

By Mark Ziety, CFP®, AIF®, Senior Advisor, WisMed Financial

“Those who work their land will have abundant food, but those who chase fantasies have no sense.” This ancient advice from Proverbs illustrates the importance of financial fitness.

Read More…


Medicare questions to ask

By Mary Krueger, Medicare Specialist

Before enrolling in Medicare, there are several decisions Medicare recipients need to make regarding their existing coverages or changes in their health insurance needs.

Read More…


Small business claims that can be surprisingly expensive

By Society Insurance Human Resources, reposted with permission from Society Insurance

While running a small business, there’s a decent chance that throughout its course you’ll have to file some sort of insurance claim (often unexpectedly). Whether due to fire, theft, on-site injury or other incident, some experts estimate that 75% of small businesses faced an insurance-worthy incident just last year.

Read more…


Long-term care insurance – but what if I don’t need it?

Tom Strangstalien

By Tom Strangstalien, Insurance Advisor

We all know the risks of a long-term care event devastating our family’s finances as well as our mental and personal well-being. Roughly half of those who reach the age of 65 will require some form of long-term care assistance during their lifetime. What this means for a married couple is likely one of them will incur costs for long-term care. Because of the astronomical odds, the cost of long-term care insurance is certainly not inexpensive.

Despite the odds, the biggest objection that I receive when formulating a plan for one of our members when it comes to long-term protection is, “If I don’t use it all the money that I spent will be wasted.” Plus, we’re all invincible superheroes anyway, right? “It will never happen to me, so I’ll just save and invest the money and take my chances.” Thankfully, with the evolution of long-term care planning over the past few years, there is another alternative that makes a great deal of sense!

The life insurance industry has existed much longer than long-term care insurance. Actuaries, as it pertains to life insurance, have these statistics down to microscopic precision in calculating how long on average a person will live and what sums of monies will be paid out and when. When it comes to long-term care, this really isn’t the case, and is in part why the costs of protection are high. As consumers of life insurance, we also know that without a doubt the benefits will be paid out, and what we have paid for the benefits. In addition, we have the added benefit that the proceeds will likely be income tax free.

Are you aware that there are now policies where some or all of the life insurance benefits can now be utilized for costs incurred for long-term care while you are alive? And on a tax advantaged basis? All proceeds of the policy will be paid either in the form of long-term care protection or a life insurance benefit to named beneficiaries. If the policy is in force, the money is guaranteed to never be wasted!

These policies can also involve some dual planning, such as a charitable gift or estate planning scenarios if the proceeds are paid out in the form of a life insurance benefit. Lastly, these plans are priced attractively, as actuaries know exactly what benefits will be paid out and on average when.

I am a big advocate of this relatively new concept in planning for long-term care. If you haven’t addressed long-term care as part of your overall financial portrait, I would encourage you to promptly do so. You may be very pleasantly surprised by the cost to benefits ratio! At WisMed Assure, we are always here to help!

Reach out to me and my team at WisMed Assure at insurance@wismedassure.org, complete this quick online form or call 608.442.3810.

Hybrid Policies Shine in Addressing Long-term Care Concerns

Tom Strangstalien

By Tom Strangstalien, Insurance Advisor

It’s not a secret that the rapidly increasing cost of long-term care is driving dramatic increases in long-term care (LTC) insurance premiums. You may also have been victim or witness to a dramatic increase in long-term care insurance premiums on a policy purchased years ago.

In the 1990s and early 2000s, people realized the potentially huge benefit of buying long-term care insurance. Along with advances in medicine and the benefits of nutrition and exercise, life expectancy increased. Coming with that was the demand for long-term care services, assisted living facilities and home health care. Popularity in long-term care insurance grew exponentially and consumers bought policies with lifetime premiums, ten pay premiums or even single premiums at an affordable price.

Actuaries calculate statistics with acute precision to guide insurance companies to make their profits. However, this is one of very few instances where they missed the mark. Typically, with life and health insurance, a significant number of people will not hold the policy for their lifetime, and the policy will lapse. This lapse rate was miscalculated, as people who purchased these policies held on to them. Furthermore, inflation for this sector of health care was severely under calculated. Simple supply and demand economics manifested cost increases well beyond the costs of other consumer goods and services. Exacerbating the situation was the decrease in interest rates, as long-term bonds are purchased to provide the future benefits.

Now, consumers are experiencing the results of this perfect storm. We are seeing shockingly increased premiums, lowered benefits or even offers by insurance companies to buy-out or provide a dramatically lower paid-up benefit. Thankfully, actuaries have learned the impact of past transgressions and traditional long-term care policies are now priced properly. But what does this mean to you? A very expensive insurance protection, along with the risk that it may never be used, so what should you do?

What happens if you pay for LTC insurance but never actually need it?

Despite long-term care insurance being so costly, I remain steadfast that long-term care protection is paramount to your financial plan! The facts speak for themselves; longtermcare.gov and the AARP agree, 70 percent of people 65 and older will require long-term care and meeting that need will continue to become more expensive.

Genworth’s Cost of Care Survey shows national annual median costs increased across the board for assisted living facilities (6.1%), home care (4.3-4.4%) and skilled nursing facilities (3.2-3.5%). The median monthly cost of an assisted living facility is $4,051, a home health aide costs $4,385 and a private room in a skilled nursing facility $8,517 a month. Genworth estimates these costs will almost double over the next 20 years.

There’s a new option for long-term care planning: hybrid life insurance long-term care policies. Actuaries have been properly pricing life insurance policies for decades. They now know the amount that will be paid out in benefits and when that benefit will be paid. In these hybrid policies, the life insurance benefit can be paid out early if needed for long-term care. If benefits are not used for long-term care, the life insurance amount is paid upon death to the policyholder’s beneficiaries. This addresses the concern of never using the policy. Benefits will not be taxable if paid out for long-term care and the life insurance benefit is paid out income tax free. In the majority of cases, this type of plan outperforms self-funding.

Hybrid policies have a lot going for them:

  • They offer flexible premium payment options. You can make one lump-sum payment, pay over ten or twenty years, or pay premiums over time.
  • It is often easier to qualify for coverage as the insurer knows what will be paid out in benefits.
  • A hybrid policy can also pay for home health care, assisted living, adult day care and even respite care for a loved one.
  • Permanent life insurance policies build cash value that can be cashed out in the future if you feel there’s no longer a need for long-term care protection or independent wealth negates the benefit.

You have options…lots of options to choose from

Hybrid life and long-term care policies come in several shapes and sizes.

  • Linked benefit policies are true hybrids that link a life insurance policy to a long-term care policy. With these, the typical long-term care benefit amount is close to or equals the life insurance amount. The greater the life insurance amount, the greater the LTC benefits.
  • You can also get a long-term care rider on a life insurance policy which only allows you to add LTC coverage at the time you buy the life insurance policy – you can’t add it later.
  • There are chronic illness or critical illness riders that let you accelerate the death benefit to pay for care if you have a qualifying chronic lifetime illness.

If you currently own some form of LTC insurance and want to compare which coverage may fit best into your current financial plan, we are here to comprehensively explore all the options and make sure your plan is suitable and won’t blow up at a time when you may need it most.

If you do not yet have any form of LTC insurance, the longer you wait, the more expensive it will become. I highly recommend exploring a hybrid life insurance / long-term care policy and getting it early. The younger and healthier the better! Avoid crisis mode or future exorbitant premiums.

As your financial partner, your WisMed Assure team is here to take care of your personal financial security so that you can take the best possible care of yourself, your family and your patients.

Contact me today to protect your tomorrow.

tom.strangstalien@wismedassure.org

608.442.3730