Immediate Care Plan: A new solution for funding LTC

When a consumer buys a traditional long-term care product, they’re buying “a fire extinguisher for a fire that's going to happen 30 or 40 years from now,” said Tyler Maddox, owner of Vitannis Care Funding in Greenville, S.C.

But when someone enters long-term care, “they have a fire that needs to be put out right now, and we have a fire extinguisher for that,” he said.

That long-term care fire extinguisher is the Immediate Care Plan, a new financial solution for those currently facing long-term care needs. By using a single upfront transaction, the Immediate Care Plan guarantees lifelong care payments for a fraction of what families typically spend on care in just three to five years. The plan is designed to fill the gap between what a care recipient needs to spend monthly on care and the amount of monthly income they have from sources such as Social Security, a pension or interest on investments.

How immediate care differs from a traditional SPIA

Maddox told InsuranceNewsNet that the Immediate Care Plan was created by Lumos Insurance, and is built on the chassis of a single-premium immediate annuity. What makes the Immediate Care Plan different from a traditional SPIA is that SPIAs assume average life expectancy — not individual health conditions. This traditional approach works well for retirement planning but doesn't account for the realities of care needs.

The difference between a SPIA and the Immediate Care Plan is in the underwriting, he said. Unlike a SPIA, the Immediate Care Plan is fully underwritten. This distinction allows for more accurate pricing that reflects individual medical circumstances rather than population averages. Underwriting for the Immediate Care Plan includes:

• A comprehensive review of health history and current conditions.
• Detailed evaluation of specific medical diagnoses and prognosis.
• Assessment of activities of daily living and mobility status.
• Direct insights from those providing daily care.

Maddox said this underwriting approach allows for more accurate life expectancy assessment, more precise pricing and potentially lower required premiums. Immediate Care Plan pricing is driven by underwriting expertise — not just interest rates.

Every Immediate Care Plan includes an early death benefit designed to protect the annuitant’s initial investment if they die shortly after the contract begins. This feature provides financial protection during the critical early months of the contract period (from inception up to month 7).

This protection structure ensures that even if the annuitant dies during the initial contract period, all or some of the premium may be returned to beneficiaries or the estate. The benefit amount is calculated as the difference between the death benefit percentage and any income payments already received under the contract.

Optional coverages include an enhanced death benefit and a cost-of-living adjustment.

Everyone receiving LTC qualifies

Obtaining coverage through the Immediate Care Plan requires a brief application followed by a quick call with the care provider to confirm specifics about activities of daily living impairments. After that, payments start within 30 days of the plan being funded.

The equivalent product in the United Kingdon, the Immediate Needs Annuity, first became available in the 1990s. The age range for the client is between 70 and 95. Clients must be currently receiving care and have a life expectancy of two to five years.

”It's going to guarantee an income for them for the rest of their life, regardless of how long they live, and everybody qualifies,” Maddox said. “Everybody who is in long-term care qualifies for this. That's the exciting part. If they have ADL impairments, they qualify. It's simply a matter of how much it takes to fill that funding gap. It's not for people who need to plan for Medicaid, but it could keep people out of Medicaid.”

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Susan Rupe is editor in chief, magazine, for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at susan.rupe@innfeedback.com.