The Long-Term Care Crisis Annuity Market Rumbles (ThinkAdvisor)

What You Need To Know

• People should use products like long-term care insurance and ordinary investments to prepare for LTC needs.

• One option for families that have not is medically underwritten annuities.

• Underwriting can reduce the cost for annuitants with shorter life expectancies.

There's the cryptocurrency market for the kids. The private credit market for investors who want to buy when others shake. The traditional annuity market for clients who plan to live forever.

And for 50-something or 60-something clients who have suddenly realized that Mom or Dad needs care now and has no useful plan in place to pay for care, there's the annuity market.

Vince Bodnar, the president of Lumos Insurance, talked about the nightmare annuity market in a recent email interview.

"Most LTC products are sold to people in their 50s who are planning ahead," Bodnar said. "There's a large population of people in their 70s and 80s who didn't plan, are in care now, and need income. That product category barely exists."

What it means: Just as asset managers are creating new types of alternative assets, insurers may now have to create new types of alternative long-term care products.

Lumos: Bodnar, an actuary who has been involved with designing, pricing and tracking long-term care products for more than 30 years, is leading Lumos efforts to establish a reinsurer-backed senior markets retirement services business.

The Crossville, Tennessee-based insurer wants to expand from its traditional base in the property and casualty markets into the life and health sector. It intends to provide Medicare supplement insurance, traditional stand-alone long-term care insurance, LTCI products aimed at the worksite sales market — and products aimed at families that need to stop planning for LTC needs and start meeting LTC needs.

The LTC implementation market: The long-term care crisis annuity would be a medically underwritten, single-premium, immediate annuity.

Bodnar said the product would address a gap that rarely gets discussed: "the back end of the problem, not the planning phase."

For families already shopping for long-term care services, buying a medically underwritten SPIA would help compensate for a lack of long-term care insurance or other LTC financing mechanisms.

Medical underwriting would make the product cheaper for older people with serious health problems and relatively short life expectancies.

Medically underwitten SPIAs have been around for years but have had trouble attracting advisor and client attention.

Lumos is also developing services that could support both families coping with a lack of LTC planning and families with financing arrangements in place but confusion over the tasks needed to arrange for, provide and manage care.

The services will include elder wellness, caregiver support and care coordination services.

"Most long-term care is delivered by family members," Bodnar said. "A daughter driving her mother to appointments, a spouse managing medications, a son trying to figure out what Medicaid does and doesn't cover."

Those families need help with providing the care, not just the ability to pay for it, Bodnar said.

Source: https://www.thinkadvisor.com/2026/03/17/the-long-term-care-crisis-annuity-market-rumbles/