For those who buy long-term care insurance, the overwhelming number of policyholders choose a 90-day elimination period. However, with recent repricing and gender-based rates meaning higher premiums, advisors and consumers are looking for ways to save premium dollars. One of those ways is using a longer elimination period. For example, in most states a 365-day elimination period is an option from Genworth, Transamerica, Mutual of Omaha and John Hancock.
The longer elimination period appeals to clients who might want to combine self insurance with LTC coverage. People who would look at those products include buyers who have high deductible health plans or consider life/LTC programs.
A big misconception among many is that the wealthier you are, the lower deductible you buy, and that high deductible plans are only for those who can't afford lower deductibles. That's not the case, as a big portion of high deductible health plans are purchased by the affluent who can easily affford to self insure the first $10,000 in medical costs. Maybe some people selling insurance have a hard time understanding the concept because they are not in that financial position to be able to do so.
What is the savings for high deductible health plans? It can be significant. Consider a 60-year-old couple who purchase $6,000 per month of coverage for a three year benefit period and 3% compound inflation rider.
Here are combined premium differences between a 90 day and 365 day elimination period:
What do you think? Worth the premium savings?