Navigating the rising costs of long-term care insurance: A guide for advisors and their clients

With long-term care (LTC) costs rising across the United States, advisors and their clients are growing concerned about the increased financial burden. Recently, policyholders in Maine were hit with the alarming news that their LTC insurance rates could surge by an astonishing 152%. Meanwhile, those in Pennsylvania are bracing for a more moderate, yet still substantial, average rate increase of 35%. These developments serve as a stark reminder that no matter which state one resides in, having a solid plan to tackle potential rate hikes is imperative for those who have invested in the protection that LTC insurance brings.

In this newsletter, we’ll delve into the pressing issue of rising LTC costs and explore how financial advisors, in partnership with tech-enabled brokerages like Modern Life, are helping clients prepare for the future.?

The escalating challenge of LTC costs

Rising long-term care costs are a growing concern in the United States. As the U.S. population ages, the demand for long-term care services, such as nursing homes, assisted living facilities, and in-home care, is steadily increasing. This surge in demand is driving up the cost of care, making it more expensive for those who need it.

The above examples from Maine and Pennsylvania demonstrate that even those who have diligently paid their LTC insurance premiums for years are not immune to significant rate increases. These unexpected hikes can put immense financial strain on policyholders and their families and stress on their carefully crafted financial plans.

Addressing the challenge

At Modern Life, our brokerage team has been working as a valuable ally for financial advisors and their LTC clients in this challenging landscape. Here's how Modern Life is assisting advisors and their clients across the country to get ahead of premium increases and make informed decisions about their LTC insurance:

1. Calculating costs

Modern Life's expert team assists financial advisors in projecting the cost of long-term care. Equipped with up-to-date data, advisors can evaluate whether their clients have adequate coverage in place to meet their potential needs.

For example, in an analysis conducted last month, Modern Life’s brokerage team helped an advisor illustrate that the costs of in-home care for a median 50-year-old saver were likely to increase from approximately $6,000 today to more than $11,000 by the time they were likely to need care in 2044:

2. Exploring alternative options

Once an advisor identifies a coverage or savings gap, Modern Life offers support in analyzing alternative solutions for clients who may struggle to afford increased premiums. These include exploring ways to reduce costs, evaluating the inclusion of policy riders, or considering hybrid LTC policies that combine life insurance with LTC coverage.

3. Compare and present policies

After thoroughly exploring potential solutions, Modern Life's brokerage team can compile the options into an easy-to-understand presentation. This saves financial advisors valuable time and empowers clients to make well-informed choices about their LTC coverage.

As advisor Mike Laatsch of Innovative Planning told Wealth Management earlier this year, assistance in developing a presentation can be a differentiator: “The [Modern Life] presentation is all developed and fully customized to each client and with their data, whereas in the past we’d get the quotes back from the carriers and we’d have to put together our own presentations.”

With proper planning, policyholders could avoid financial hardships when they need long-term care the most. A proactive strategy can provide peace of mind and economic security for policyholders and their families.

Next steps

With guidance and support, financial advisors can help their clients prepare for the future with confidence. By calculating costs, exploring alternative options, and presenting policies clearly, advisors can ensure that their clients are well-equipped to navigate the rising costs of long-term care insurance.

In an era where uncertainty is a constant, being prepared for potential rate hikes is not just advisable; it's essential. To learn more about how Modern Life can assist your LTC clients in preparing for the future, schedule a demo today.?