Hybrid Long Term Care and Annuity Policies
We’ve written before about the risks that long-term care policies and annuities can pose to seniors. All too often, the policies fail to live up to their inflated marketing materials, leaving seniors trying to make up a shortfall in their income, or pay for costs and services they expected to be covered. That makes it all the more worrisome that some insurance companies have begun selling the two products together as a package deal marketed to seniors.
Both long term care insurance and annuities are less profitable for brokers and insurance companies than they once were. Raised awareness about the risks, increased regulation, and less popularity than expected have contributed to decreased revenue from these products, especially from variable annuities. Hybrid long term care an annuity policies are one way the industry is trying to squeeze some more value out of the market.
Selling annuities to bolster long term care insurance essentially admits one of the central flaws with those policies: they rarely provide the amount or degree of coverage that seniors need. “Long term” can be a misnomer, with some policies being severely restrictive with duration of care they’ll pay for. Some cover only a minute portion of the total cost of care, and some will pay only for very specific types of care, which may not be what a senior needs, or which they may not realistically be able to get access to. Using an annuity to cover up these shortcomings is one solution, but few investment advisors think that it’s a good one.
These products are sold as a way for seniors to hedge their bets: if they pass away early, some of the money that went into their LTC insurance can be added to the death benefit for their heirs. If they live longer, the annuity will provide additional income to aid in paying medical and care costs. However, these policies also combine the flaws and weaknesses of both their components, without providing an equivalent benefit. Without even getting into the morass of clauses, riders, exemptions, and legalese that goes into these convoluted contracts, annuities by themselves contain numerous fees, management costs, surrender penalties, and opaque mechanisms designed to ensure that the broker and insurance company make money.
Some of the major annuity and life insurance providers are:
- Aviva/Athene/Accordia Life Insurance Company
- Transamerica Life Insurance Company
- John Hancock Life Insurance Company
- Bankers Life Insurance and Casualty company
- Massachusetts Mutual Life Insurance Company
- Midland Life Insurance Company
- North American Company for Life and Health Insurance
- Pacific Life Insurance Company
- Prudential Life Insurance Company
- Genworth Life Insurance Company
- ING USA Annuity and Life Insurance Company
- Lincoln Benefit Life Company
- Metlife/Metropolitan Life Insurance Company
- Unum Life Insurance Company of America
- Voya/Reliastar Life Insurance Company
If you or a loved one has purchased long term care insurance, annuities, or life insurance, contact the Alameda long term care insurance attorneys at Evans Law Firm. Our attorneys have experience handling cases involving complicated financial instruments and large insurance companies, and can help you seek justice either in a jury trial or through an equitable settlement. We can be reached at (415) 441-8669, or by email at firstname.lastname@example.org.