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The Alzheimer’s coverage solution that advisors are ignoring

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Life Health Professional | 23 Oct 2015, 08:15 AM Agree 0
With more and more cases of dementia in society, the insurance solution is a product that advisors seem to be in the dark about as much as consumers
  • LIG | 23 Oct 2015, 10:04 AM Agree 0
    As someone who always discusses LTC with clients who reach age 50 or over I would contend that even when an insurance agent discusses LTC with clients the resistance to the purchase of that product by clients is substantial. This is not due to an acceptance of the potential need for the coverage but is often due to the pricing of the product. The suggestion from many who market LTC for insurers (employees) is to recommend 2 or at most 5 year benefits to reduce the premium payable by the client. It would seem that neither of those benefit periods would be sufficient for most who develop Alzheimer’s or other forms of dementia and such a recommendation might well expose an agent to being sued by a lawyer hired by the family of a client who bought based on the recommendation for a limited benefit period when the need was ultimately of a longer duration. It would seem to be for that reason that Ms Martin is suggesting lifetime benefits in a LTC contract.

    A secondary issue seems to be that the underwriting of LTC applications is quite stringent and we see far more declined applications for LTC than for CI or DI and certainly than for life insurance. Often these declines are based on the APRs which may suggest some tests to be done at future dates or to be done if a suggested change in lifestyle is not successful in remedying a complaint.

    Yes, LTC would be the obvious, although at best very partial, solution to the need for funds for long term care but the premium dollars available from most clients are limited. Those with greater resources with which to pay the premiums may be much better able to self insure and for them it is a financial calculation. For those who may need the funds the most their premium dollars go to life and disability insurance first, and then to CI (if they qualify) and only then to LTC.

    As an aside many of the DI policies that we have sold over the years qualify for conversion to LTC and even then the take-up by clients seems to be very limited. For every 11 that we quote one client applys for LTC coverage. Most of these clients, in fact, continue their DI even after age 65 as they would still need the 24 months of benefit payments for total disability that would be available if they are disabled after age 65 and prior to age 75.

    ATB

    Lawrence Ian Geller

  • | 26 Oct 2015, 07:19 PM Agree 0
    Agree 100% with Lawrence. Per usual ... excellent comments and a firms grasp of the situation.

    Life and disability coverage(s) are the priorities. - CI coverage with 1 in 3 odds is always a good idea.

    CI with ROP can be viewed at compulsory savings. - I cringe every month my CI premium is withdrawn, but the $100,000 CI benefit could be a life saver for me. If I don't need to make a claim, it will be a welcome bonus for retirement.

    At least 10 insurers who provide CI coverage include coverage for both Alzheimer's and Loss of Independence. However, only one insurer ...offers the ability to convert both their Di & CI policies to a Long Term Care policy.

    Why don't people buy the coverage they should? For those with a limited income, the answer is obvious.
    However, the reality is many have the income and ability to pay, but do not prioritize. They allow 'wants' to overshadow the 'needs'.

    We see it every day. Many could afford the coverage (some is better than none), but they live for the moment; for the dinner out, the big screen TV, the fancy car as opposed to the financial security provided by insurance coverage for themselves and/or families.

    Ken MacCoy, CHS
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