Insurers are responding to the decline in the sales of long-term care policies by offering combination policies that potentially offer life insurance or annuity benefits as an alternative if long-term care is not needed. They attempt to overcome the consumer’s objections to spending money on insurance benefits they may not need or receive. But how different is LTC insurance from other forms of insurance in this respect?

The industry’s strategy is understandable from a marketing standpoint. But do these products make sense for the consumer, rather than for companies and their agents? I think not. While I don’t pretend to be familiar with all the variations of these products, I see two main problems with them.

In the first place, they do not offer long-term care insurance as such. They build up a pot of money that could be used to pay some long-term care expenses, but that is no different than setting aside a savings account for the same purpose. It is really not the same as an insurance policy into which one pays an affordable amount in exchange for a known amount of protection against a much larger and unaffordable loss.

In addition, the life insurance and annuity features of these combo policies are usually not desirable or necessary. If they are, purchasing them separately while obtaining actual long-term care insurance will likely provide greater value. Those who need long-term care insurance aren’t necessarily the same consumers who, at older ages, might buy life insurance. And the undesirable tax features and common high costs of most annuities generally make them a poor investment choice.

The “use it or lose it” aspect of pure long-term care insurance may discourage its purchase. But the same objection could be made to most other forms of insurance (e.g., disability, term life, homeowner’s). That is the point companies and agents should make in rationally explaining the costs and benefits of an insurance product with great financial and social benefits for those who can afford it.