Permanent Life An Alternative To Long-Term Care Coverage

Just as disability insurance is the linchpin for income protection during your working years, long-term care (LTC) insurance is a critical component to ongoing asset preservation.  But nearly two decades of historically low interest rates has placed enormous pressure on the LTC market, compounding the actuarial challenge of pricing for a plan that likely won’t pay for benefits for several decades.  As a result, the last ten years has witnessed a mass exodus from the group LTC market, and those carriers that have remained have raised rates, tightened-up underwriting, and/or ceased issuing coverage to new applicants.

With such an obvious gap in the benefits landscape, what options are left for employers and their employees?

For many, the answer can be found in permanent life insurance coverage, like universal life or whole life plans.

For purposes of this article, the distinction between universal and whole life is immaterial.  Both fall under the heading “permanent” life, meaning coverage is intended to remain relevant post-retirement – a key difference versus the traditional term life plans that are common in most benefits packages.  Permanent life policies come in a variety of shapes and sizes, but one feature becoming more common offers living benefits on top of a traditional death benefit.  Often, these optional policy riders allow the insured to draw on a percentage of the death benefit to use when they’re seriously ill or in need of long-term care services.

Permanent life plans can be offered on a voluntary basis, via payroll deduction and they usually include options to cover spouses and dependents too.  The living benefit options, while not a perfect replacement for full-blown long-term care insurance, offer better-than-nothing reassurance in a market that today has few viable LTC options.

More options, like permanent life insurance options, can make your employees feel more valued. Learn more about M3’s Worksite Practice.

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