According to the Alzheimer’s Association, as many as 5.3 million people in the United States are currently living with Alzheimer’s disease, a figure that is increasing every year due to the growing population of elderly people. While the medical field continues to develop new drugs that increase the lifespan of humans, the financial and economic ramifications of a growing elderly population should be considered.

People stricken with this devastating disease often require some form of care giving; a responsibility most often shared among relatives. Those relatives are sometimes required to scale back the hours they devote to a job, or quit working completely, effecting their personal financial situation and the U.S. labor market. As a result, Long Term Care Insurance (LTC) was developed nearly forty years ago as a way to supplement Medicare coverage and help cover the exorbitantly high costs of nursing home and other private care.

While the LTC product has certainly helped many effected families cope financially with the cost of medical care, the premiums paid to purchase a LTC policy are certainly not inexpensive. Some people may never require the benefit of owning LTC coverage, and for them, any premiums paid into a traditional LTC policy are essentially lost. Enter the new LTC/annuity hybrid.

According to an article in the Retirement Income Journal, four companies – Genworth Life, United of Omaha, Bankers Life and OneAmerica – have thus far developed a product that is structured as an annuity, but offers a LTC rider that potentially covers the cost of medical care. If care is not need, the annuity will gain interest as a normal fixed annuity, paying out a specified monthly benefit. However, in the unfortunate case that nursing home care is needed, the LTC benefit rider will kick in to pay the costs tax-free.

Given the uncertain future of health care coverage in America, decreasing social security benefits and the overwhelming number of baby boomers entering retirement, the market for a LTC annuity hybrid is rife with potential. While the product is still in its developmental stages, those companies that can fine-tune and best market the LTC annuity will compete for a huge percentage of market share.