Baby Boomer trend, asset-based long term care insurance

Life insurance policies that provide long-term benefits of treatment are growing in popularity and attracting younger baby boomers anxious to protect their portfolios.

The sales policy, when measured by premiums, grew 20 percent last year in 2010, and the number of lives covered has increased 13.5 percent, according to a study by the American Association for Long-Term Care Insurance.

Association's annual study also showed that shoppers are buying policies at a young age. Fifty-three percent of male shoppers were in 65, compared to 48 percent of the buyers of that age group in the study year. Fifty per cent of female buyers last year were 65, compared with 44 percent in 2010. (See: "It 's crazy for life insurers to test for dementia?")

"These are usually people with a heritage that can very often self-insure long-term, but prefer to transfer the risk of an insurance company," says Jesse Slome, executive director of the association.

The products - called asset-based, combination or related policies - usually require a lump-sum premium payment, usually $ 100,000 or more. They provide long term benefits of treatment for a number of years, a death benefit if you do not use long-term and a refund option returns the reward in case you decide you do not want the policy, after all .

The characteristics to answer three big questions from consumers who think long-term care coverage, said Alyce Peterson, vice president of marketing for Pacific Life, which introduced Pacific PremierCare in March:

    What happens if I need long term care?
    And if I do not need?
    What happens if I am in this policy and is not really for me?

What is fueling the asset-based insurance long term trend?

Slome says today's low interest rate environment could be fueling some of the demand. Consumers can not make a lot of attention being paid on cash for emergencies, so you understand that it could also put in an insurance policy can provide long-term care benefits worth many times more than the original investment. Or at least, can provide money to heirs if they do not need long term care.

Combination of policies have been around since the late 1980, but did not take off until the mid to late 2000, when insurers upgraded and repackaged products. (See: "tips on buying long-term care insurance rates from rising.")

Lincoln Financial Group has introduced MoneyGuard Reserve, a universal life policy, in 2005, marketed as "live, or die out" solution with a simplified application process. Candidates must answer medical questions, but there is no need to undergo a medical exam life insurance or get a blood test.

Last year, Lincoln Financial launched MoneyGuard Reserve Plus, now available in most states. The new product has eliminated the periods of elimination, so you can reap the benefits long term care, as soon as you qualify for them. It also allows access to long-term care when you live abroad and provides an option for services to increase and keep pace with inflation.
By the numbers: asset-based long-term scenario of insurance

Here's an example of how it works:

A 60-year-old non-smoking woman in good health pays a premium of $ 100,000 for a policy to provide up to six years of long-term benefits of treatment. If you do not need long term care, the policy pays a death benefit of $ 166,766 for its recipient. If you need long term care, the policy pays $ 500,298 for qualified long-term care expenses. Its maximum benefit available is $ 83,383 per year for six years.

MoneyGuard sales were up 19 percent in the first quarter this year compared to the same quarter in 2011, says Michael Hamilton, vice president of MoneyGuard Lincoln Financial Group and Institutional Product Management.

Peterson says that sales of Pacific PremierCare are exceeding expectations. The universal life policy provides for between two to eight years of their long-term care options and offers the benefits of inflation as well as a simplified application process. A big selling point is the long-term care benefits are exempt from taxes, says Peterson. The consumer self-insured would have to pay taxes on money pulled out of a (k) account to pay for 401 long-term care.

Slome says it expects global sales of combination products to grow as more insurers enter the market, but does not believe that will replace the traditional products of long-term care insurance.

Combination policies are out of reach of people who can not afford to part with a lot of money all at once. He warns that the majority of combination products, unlike traditional long-term care insurance, do not include inflation protection, and some of the benefits of an offer for the only two or three years. Yet, he adds, "I think they are a very good solution today for the right kind of person."