PFP2423. Analyzing Long-term Care Funding Solutions With Multi-state Modeling

Multi-state modeling provides a unified framework for analyzing all methods of long-term care (LTC) funding, including standalone LTC insurance, hybrid life/annuity/LTC policies, LTC riders, impaired-risk annuities, and LTC-enhanced life annuities, defined-benefit pension plans and Social Security. Outline of the presentation * Introduction * Valuation of LTCI policies - Overview of multi-state modeling - What are the states? - What are the transition probabilities? - Discounting for probability of occurrence and the time value of money * From valuation to advice: Case studies - Moving from before-tax to after-tax results - Moving from benefit/cost ratios to scenarios - Incorporating additional information * Analysis of hybrid policies and LTC riders - Breaking the policy into LTCI and non-LTCI components - Moving from before-tax to after-tax results - Limitations on the analysis of hybrid policies and LTC riders * Analysis of LTC-enhanced life income - What is LTC-enhanced life income? - Breaking LTC-enhanced life income into LTCI and non-LTCI components - Three ways to get LTC-enhanced life income ◦ Commercial annuities ◦ Redesigned defined-benefit pension plans ◦ Redesigned Social Security * Directions for future research

Learning Objectives:

• Evaluate one method of analysis for all ways of paying for long-term care.
• Identify the hurdles to getting precise results.
• Identify an agenda for future research.