The best coverage your client’s money can buy

For assistance in recommending affordable benefits, I asked Stephen Nussbaum, an independent agent in Loudonville, N.Y., what he suggests to his clients and why.

Elimination period/deductibles

• Avoid very low deductibles or elimination periods (EP), since lower deductibles have a much higher premium cost. Also, Medicare and a Medicare Supplement may help defray the cost up to 100 days at the start of a long-term care episode. That coverage often counts toward satisfying the elimination period.
• Recommend calendar day EP over service day EP.

Benefit length

• Avoid unlimited and very long benefit lengths. The best option is a five-year policy.
• Concerning limited versus unlimited or lifetime coverage, based on buying at age 55, unlimited costs 40 percent more, on average, than five years of coverage.
• Over 90 percent of chronic long-term care episodes will be fully covered by a policy offering five years of benefits.
• A five-year policy usually lasts longer than five years of use. The unused daily benefit is carried over for future use.

• If your client is very concerned about a 20-year Alzheimer's episode, you can recommend longer coverage terms, shared care riders, higher daily benefits, or a state's LTC Partnership program.

Note from Margie Barrie: "Concerning benefit length, I do prefer lifetime if there is a history of Alzheimer's in the family and particularly if a female."

Other ways to prolong the life of the policy and/or reduce costs

• Shared care is often more cost effective than unlimited. But depending on the company, the additional cost can run from 10 percent to 22 percent for that rider. That is still less expensive than unlimited coverage.
• Use a higher daily benefit amount to expand the useful life of the policy
• Avoid almost all other riders (i.e., survivorship, non-forfeiture, return of premium, etc.). They are expensive add-ons that do nothing to enhance coverage.

• Encourage annual premium payment modes (especially at today's interest rates).