When standalone LTC insurance got its big start in the late 1980's, it was often distributed by advisors who were used to working in the "senior" marketplace through Medicare supplement plans.  Because of that, early LTC regulations focused on market conduct problems that occured in the Medicare marketplace - such as selling multiple plans on one person or replacement and churning issues.

Luckily, the regulators' fears were unfounded.  LTC insurance became a popular product distributed not just through LTC specialists but also through financial planners who were looking to protect the assets of higher income Americans.  Products sold through 2009 tended to be polices with high benefit limits, including 5% compound coverage and lifetime benefit periods.

As we all know, the financial crisis and plummeting interest rates changed the pricing structure of LTC insurance, making those types of products very expensive even for those who could afford the premiums.  At the same time, life insurance plans with living benefits, including chronic care and LTC riders, became more prevalent and available. 

Because of this, a different strategy might be more useful for people than simply buying one policy. Instead, they can buy a standalone LTC policy with comprehensive benefits and excellent care coordination features and supplement it with life insurance with an LTC rider.  Here is an example of how that might work:

1) A 51-year-old couple purchases standalone LTC plan with a $3200 approximate annual premium and a combined shared benefit pool of $300,000. Plan allows for periodic benefit buyups.  If the purchaser is self-employed, $2,800 of the premium is deductible as health insurance.  If they aren't business owners, they may still have a health savings account which can be used to pay up to $2,800 of the premium.

2) At age 60, the same couple is substantially wealthier and concerned the initial $300,000 of LTC coverage may not be enough.  In addition, they are interested in guarantees, so they purchase a second to die whole life insurance policy with a $300,000 face amount that can be accelerated for LTC needs.  They also include a continuation of benefits rider that provides lifetime coverage and automatic inflation coverage. Total annual premium for this type of plan - around $13,000.

Now, the couple can use the standalone policy first if care is needed protecting the life insurance policy value and death benefit.  In the worst case scenario, they are covered for care in any amount.

It may also make sense to buy a reasonable amount of standalone coverage now and supplement through other plans in the future.  Interest rate increases may mean better policy values. 

Regardless of the approach, diversification in LTC planning may make a lot of sense.