Record Premium Growth For Asset-Based LTCi Product

May 02, 2013

By Cyril Tuohy


First-year premium income for Asset-Care, a life insurance product with long-term care benefits, rose 28 percent in 2012 over the previous year, according to State Life Insurance Co.

State Life sold more of the policies in 2012 than in any previous year, the company also said.

“Many of us have seen first-hand the financial devastation that can occur for a family when an individual requires long-term care,” Chris Coudret, executive vice president of State Life, said in a news release. “More and more consumers are looking to guarantee their long-term care protection and are turning to asset-based long-term care products like Asset-Care.”

An asset-based long-term care insurance product is sometimes referred to as “hybrid” or “combo” product. It is a life insurance policy with a long-term care rider attached to it and offers an alternative to traditional long-term care insurance.

A $50,000 principal used to pay for an asset-based long-term care policy can generate a long-term care insurance policy of $200,000. Long-term care expenses often can cost more than $80,000 a year.

Proponents of asset-based long-term care policies say they provide a good way to plan for medical care while not having to worry about paying premiums for a policy that may go unused.

Other advantages include an insurance payout to beneficiaries at the time of death so long as the policy has not been exhausted for long-term care expenses, and premiums are guaranteed never to increase, State Life said. The life insurance death benefit also can be accessed federal income tax-free to pay for qualifying long-term care expenses.

Asset-Care’s popularity also is being driven by a joint-care option, where a couple can purchase one policy that provides long-term care funding for both people, the company said.

“There is a lot more awareness now among consumers and financial professionals that the long-term care funding options they are most familiar with are sometimes either less than ideal or not even available anymore,” Coudret said.

LIMRA reports that of the top 20 companies that offered individual health-based long-term care insurance in 2005, half have left the market.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He has also written about food, restaurants and travel. He can be reached at [email protected].

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