OneAmerica urges older Americans to consider asset-based long-term care products
As the CLASS Act fizzles, life insurance and annuity products with long-term care benefits could be viable option; Recent federal law provides tax advantages
Jim Gavin, Media Relations Manager
(317) 285-4168 or firstname.lastname@example.org
Indianapolis – (Nov. 21, 2011) With the potential repeal by Congress of the Community Living Assistance Supports and Services act (CLASS act) – a federal law designed to provide long-term care coverage – The State Life Insurance Company, a OneAmerica® company, is urging consumers and financial professionals to consider asset-based long-term care products.
“Unfortunately, the issues surrounding the CLASS act coupled with the challenges found in the traditional long term care insurance market might lead people to believe there are no viable options,” said Chris Coudret, executive vice president for State Life. “In fact, there are more solutions available now that benefit consumers, through guaranteed premiums and benefits payable even if long-term care services aren’t required.”
Part of the recent federal health reform legislation, the CLASS act was to create a voluntary public insurance program to pay for long-term care expenses, but last month the Obama administration announced it would not push forward with the program due to cost and sustainability concerns.
Meanwhile, some life insurance companies like State Life have found success offering a suite of asset-based long-term care products that use the structure of life insurance or annuities but provide long-term care benefits as needed. According to the insurance industry research organization LIMRA, these products – known as “hybrid” or “combo” products – saw sales growth across the U.S. of 62 percent in 2010.
“With the CLASS Act option likely being removed from the discussion, the onus is back on private insurance to provide quality long-term care protection,” said Bruce Moon, vice president of individual products for the OneAmerica companies. “Consumers need to know these options are available across the country, and that the federal government has provided tax advantages to make these products more attractive and beneficial to consumers.”
The market for annuities with long-term care benefits significantly expanded after a provision of the Pension Protection Act took effect in 2010, allowing the growth in cash value to be used for qualifying long-term care expenses without being subject to federal income tax.
In addition, other approaches to funding long-term care use the structure of cash value life insurance, payable with a lump sum (single premium) or annually. While guaranteed premiums make these options attractive, consumers also benefit because money is available to heirs even if long-term care ends up not being necessary. Asset-based long-term care products are available from ages 20 to 85.
“Asset-based long-term care products can address the triple-threat our nation faces when it comes to long-term care,” said Coudret. “One, an aging baby boomer population means more long-term care will be needed. Two, medical achievements are allowing people to live longer, which increases the need for long-term care. And three, health care cost trends are outpacing inflation. The time for consumers to seek protection is now, and asset-based long-term care should be front-and-center in that discussion.”
About State Life
The State Life Insurance Company, a OneAmerica® company, is focused on providing asset-based long-term care solutions. State Life is a recognized leader in providing these solutions, which utilize life insurance, fixed-interest deferred and immediate annuities. The company’s extensive Care Solutions portfolio of products helps consumers prepare for future long-term care needs by helping to protect their assets.
OneAmerica Financial Partners, Inc., is headquartered in Indianapolis, IN. The companies of OneAmerica® can trace their solid foundations back more than 130 years in the insurance and financial services marketplace.
OneAmerica’s nationwide network of companies offers a variety of products to serve the financial needs of their policyholders and other clients. These products include retirement plan products and services; individual life insurance, annuities, long-term care solutions and employee benefit plan products. The goal of OneAmerica is to blend the strengths of each company to achieve greater collective results.
The products of the OneAmerica companies are distributed through a network of employees, agents, brokers and other distribution sources that are committed to increasing value to our policyholders by helping them prepare to meet their financial goals.