Is large-worksite traditional long-term care insurance dead or alive? It depends on who you ask, said Kevin Sypniewski, founder and president of AGIS Network, who spoke during a recent event, “Don’t Be Scared of Long-Term Care” by the National Association of Insurance and Financial Advisors’ Limited and Extended Care Planning Center.
Sypniewski said he has heard LTCi experts say it’s dead due to full underwriting and declines. Often, it’s one of the company’s executives who ends up getting declined for coverage. But decline rates among employees can be misleading, he said. For example, if 30% of the employees who apply for coverage are denied, that means 70% were approved. “Should those 70% who are approved overpay and underinsure for the 30% who were declined?” he asked.
There’s a better option, Sypniewski said.
Life insurance with a guaranteed-issue LTC rider can solve multiple needs. “It’s not an either/or because people need both,” he said.
“You will pay more money for this. But it makes sense that it costs more because you’re getting two products and chances are that you will get money from one of them.”
Life insurance with LTCi solves multiple needs, he said. Life with LTCi helps address the lack of retiree life insurance while providing long-term care benefits.
However, traditional LTCi is given better tax treatment, he said. Employer-paid premiums are generally deductible, and the benefits are tax free. Some states offer tax deductions or tax credits to employees who pay premiums.
“I think we should offer either/or and not throw one product or the other to the wayside,” he said.
Of the employers AGIS has presented this option to so far, 50% like the “both” idea, Sypniewski said.
“We’ve had good success with this and will continue to do this,” he said.
Susan Rupe is managing editor 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 [email protected]. Follow her on Twitter @INNsusan.