If you’ve planned for long-term care, you’ve done well because there’s a pretty good chance you or your spouse will have a need for care at some point. According to the National Clearinghouse for Long-Term Care (www.longtermcare.gov), about 70% of people over age 65 will need some type of long-term care during their lifetimes and more than 40% will require care in a nursing home. According to the National Clearinghouse, in 2010 it cost an average of $75,000 per year for a semiprivate room in a nursing home, while one year of care at home costs about $19,700 per year.
You may have bought long-term care insurance (LTCI) to help cover the potential costs of long-term care. The Life Insurance and Market Research Association (LIMRA) estimates that over 7 million Americans have LTCI. However, the U.S. Census Bureau estimates that in 2010 there were over 40 million Americans age 65 and older. So only a small percentage of those who face the increasing prospect of long-term care have LTCI.
Companies leaving the business
In spite of the apparent need for LTCI, some of the largest providers of individual LTCI have either stopped selling individual LTCI or they’re planning to do so (although some of these carriers will remain in the group LTCI market).
So if the need for LTCI remains, why are some of the biggest insurers getting out of the individual LTCI market? There are a number of reasons, such as poor investment returns due to the chronic low interest rate environment, the fact that more policyowners are keeping their insurance instead of letting it lapse, the rising cost of long-term care, and the fact that people are living longer, leading to larger LTCI payouts.
If your LTCI carrier is getting out of the LTCI business, don’t worry–you’re still covered. Generally, insurers that leave the LTCI market must either continue to service existing policies or transfer that responsibility to another carrier.
Your LTCI premiums may increase
If you purchased your LTCI policy more than a few years ago, you could be in for a surprise when you get your next premium bill. Several states have allowed insurers to increase their premiums. If your premium does increase significantly, you may be faced with a dilemma: do you keep the insurance and pay the higher premium, or should you stop paying for the insurance altogether and lose not only the insurance coverage, but also all the prior premiums you paid? Here are some alternatives to consider:
- Shorten the length of your insurance coverage. For example, if you have lifetime coverage, decrease it to 3 or 5 years. The National Clearinghouse estimates women need care on average for 3.7 years, while men need care for about 2.2 years.
- Drop or change your inflation protection. This provision can almost double your premium in some cases. Depending on how long you’ve had your policy, your daily benefit might have increased enough over time to allow you to lower the inflation protection from say 5% compound to 3% simple interest (and lower the cost for that protection), or you might even be able to drop the inflation coverage completely.
- Consider replacing a current costly policy with a new one. Even though you are older, you may find that today’s carriers offer policies with fewer “bells and whistles” and at a lower average cost. Also, some insurers now offer life insurance or annuities that also provide long-term care benefits. For example, many life insurers allow you to accelerate a portion or all of your death benefit to provide a monthly payment that you can use for long-term care expenses (although there may be an additional cost for this provision).
Compliance: 2012-003996
Written by Broadridge Forfield







Bountiful, UT 84010
Stocks mixed, but retain most of first quarter’s gains
May 7th, 2012Stocks dipped in the first part of April and then recovered somewhat, as strong corporate earnings contended with weaker than expected economic growth in the U.S. and the resumption of negative news from Europe. After advancing for six months straight, the Dow Jones Industrial Average eked out a tiny gain for April, although other major averages were down slightly. Repeating its pattern of the last two years, the market has paused after a strong rally (the S&P 500’s 12% gain in the first quarter of 2012 was its best in more than 10 years) as investors await clues as to the strength of the economy and the sustainability of corporate profits.
The major averages varied only slightly from where they finished the first quarter, as shown in the table below.
3/30/12 Close
4/30/12 Close
Change
Gain/Loss
13,212.04
13,213.63
+1.59
+0.01%
3,091.57
3,046.36
-45.21
-1.46%
1,408.47
1,397.91
-10.56
-0.75%
According to the initial report from the Commerce Department, U.S. gross domestic product grew by 2.2% in the first quarter, less than many economists had expected. However, the advance quarterly reports are revised – sometimes significantly – before the final figure is computed, meaning that no firm conclusions can be drawn as yet as to the economy’s future strength. Consumer spending, which accounts for about 70% of GDP, rose more than anticipated in the first quarter, helped by mild weather and a surge in motor vehicle sales. However, consumer spending has outpaced disposable income by a wide margin over the last few quarters, suggesting the recent pace will be difficult to sustain. In fact, personal spending slowed in March, rising 0.3%, the Commerce Department said, just under the 0.4% growth forecast by economists in a Dow Jones Newswires poll.
Earnings season is in full swing, and so far, the news has been generally good. Of the 300 companies in the S&P 500 that have reported first-quarter earnings, some 70% have beaten analysts’ estimates, according to S&P Capital IQ. Profit margins also seem to be holding up.
Overseas, concerns grew about weakness in Spain’s economy, which contracted for the second consecutive quarter – the technical definition of a recession. The credit ratings of Spanish banks were downgraded Monday, and Standard & Poor’s lowered Spain’s debt rating by two notches last week. Fears that weakness in the Eurozone could spill over to the U.S. helped derail the market’s advance in 2010 and 2011, so investors are watching this area closely.
Going forward, the April jobs report – due out Friday, May 4 – will give some indication as to the direction of employment growth, which is crucial to the continuation of consumer spending. The weeks ahead also will provide a clearer indication as to whether corporate profits, a key driver of stock prices, will remain robust.
After rising roughly 25% since last October, stocks have reached levels well ahead of what many market analysts had predicted. While that alone may not be a reason to make any changes in your portfolio, it’s also a situation that bears watching. If you’d like to discuss that – or have any other questions or concerns – please give us a call.
Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The performance noted does not include fees or charges, which would reduce an investor’s returns.Compliance approval M12-1588
Tags: 2012, Market Outlook, Professionally Speaking, Raymond James
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