Range of Exposure

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Range of Exposure Tool

Long-term care (“LTC”) needs can create a wide range of costs. People commonly ask about the “average length of LTC”, but averages are not very meaningful.  If everyone knew they would be average, there would be no insurance industry of any type.  The purpose of insurance is to protect against not being average.

Our “Range of Exposure” tool facilitates an in-depth discussion of family LTC risks (your client’s most important LTC exposure may be elder relatives’ potential need for care).  Based on a person’s gender, age, marital status, support network, view of future LTC inflation, etc., we project their likelihood as an individual or couple of spending less than $100,000; $100K-$250K; $250K-$500K; $500K-$1KK or over $1,000,000 on LTC and the average cost in each of those 5 cost brackets as well as overall.  It is easy to test the impact of assumptions such as inflation rate, support network, etc. by running different scenarios side-by-side.

Based on whatever long-term gross investment yield and combined marginal state and federal income tax rates you input, you can see the annual or lump-sum savings necessary to “self-fund” the cost in each bracket or overall, which you could then compare to insurance premiums (calculated from another source).  The lump sum could indicate whether liquidating a residence might fund LTC.

If desired, you can design a wide variety of insurance solutions (stand-alone LTCi, linked-benefit life/LTCi, life insurance with an accelerated death benefit, or life insurance to replenish the estate).  The model indicates what portion of the average projected LTC costs in each bracket would be covered by that policy.  You can tweak the maximum monthly benefit, benefit increase feature, benefit period (core and extension of benefits for linked-benefit products), and elimination period to find the preferred insurance product and design for that client.  For example:

  • One client prefers to stay home as long as possible while not overly burdening relatives and to rely upon Medicaid if they eventually need facility care. Such a client would be content with a policy that fell increasingly short at higher claim-cost ranges.
  • Another client might feel able to self-insure significantly but want to avoid a very huge cost. Such a client would be content with low reimbursement percentages in low-cost claim ranges but would want higher reimbursement percentages for more costly claim ranges
  • Other people might be in the middle. They might be able to cover inexpensive needs and feel that very expensive needs are beyond their control even with insurance.  Hence, they might focus on the effectiveness of the insurance at intermediate LTC cost levels..

See our user guide for more details.

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