A New Solution to an Old Problem

The world of long-term health care continues to rapidly evolve as people are living longer and longer, and retirees face challenges regarding how best to protect their wealth from the cost of long-term care.

Many insurance companies are leaving the long-term care business, where traditional products are risky for their capital. Less and less of these products are being sold because pricing has gone up and up, primarily due to a combination of our low interest rate environment and the increased longevity of the population.

Not only is the pricing of new policies going up, but many of the companies that have sold these products over the years are going back to existing policyholders who already have the product and raising their policy premium rates. This is understandably creating challenges and causing difficulty for people who have these contracts.

There are, however, new products that are being developed. One such recently released product allows an individual to make one payment and with that one payment get:

• a pool of money for long-term care;
• a pool of money for a death benefit;
• a pool of money cash value.

With one payment, they get three pools of money. The cash values have a guaranteed pool and a dividend. This type of policy is what is known as a participating whole life policy:

• Cash value will increase based upon a guaranteed amount known as Guaranteed cash values. The Cash values will also grow through the crediting of dividends, though these are not guaranteed.
• The death benefit will increase when the company pays dividends (cannot be guaranteed but will be projected in the illustration).
• The long-term care pool also will increase through those same non-guaranteed dividends.

This is the first of its kind. Similar products have been sold, but not participating whole life. This new product, called Care Choice 1, is sold by MassMutual. It is an exciting new offering for people who are looking to use the concept of self-insurance, because by putting money into this product, you have the ability to take your money back, and if you pass away, your family would get more than the initial amount.

If you got sick and could not do two out of six activities of daily living (ADL), the policy has a big long-term care benefit for you. It’s worth considering for anyone who has not created a solution for their family’s long-term health care needs.

If you’d like to learn more about Care Choice 1, give us a call or send us an email. We’d be happy to discuss it with you and help you understand this new product offering.