Understanding the Value Behind Your Life Plan Contract
A Review of A.V. Powell’s Talk on the Financial Viability of CCRCs
Few people are better equipped than A.V. Powell to demystify the financial engine that powers Continuing Care Retirement Communities (CCRCs). In his recent presentation to residents at Pennswood Village, Powell—a consulting actuary with over four decades of experience—delivered an engaging, insightful overview of how actuarial science helps ensure that communities like ours remain financially sound while fulfilling their long-term care promises.
Powell’s core message is both reassuring and empowering: your contract can be a very good deal—if it’s properly priced and managed. And understanding how that happens is not just for boards and accountants. It’s for residents, too.
With warmth and clarity, Powell walks the audience through the essential features of life plan contracts—also known as Type A, B, or C continuing care contracts. He explains how entry fees are not arbitrary costs, but actuarial prepayments for future care. Much like a combination of long-term care insurance, annuity, and housing, your contract pools risk among residents so that no one bears the full brunt of aging alone. Residents who need less care help subsidize those who need more—a system that relies on careful forecasting, not guesswork.
Powell's visual illustrations—shown in the slides and described in the video—contrast rental agreements with Type A or B contracts. A typical life care contract may represent $750,000 worth of lifetime services, but not everyone will use the same amount. The benefit lies in risk pooling: a fair tradeoff that grants peace of mind and long-term affordability.
He’s especially candid about common misunderstandings:
- Refundable contracts, for example, can undermine the risk-sharing model if not carefully funded.
- “Aging in place” may seem desirable, but the costs of delivering advanced care in an apartment can exceed those in a central facility.
- And “no risk” contracts don’t exist—every type involves tradeoffs in healthcare exposure, financial stability, or future refund expectations.
One of the most eye-opening portions of the talk addresses actuarial balance, a concept few residents have likely encountered. Powell urges residents to ask two key questions of their community’s management:
- What is the lifetime value of the contract?
- Are fees set to cover that value?
It’s not enough to have healthy-looking bank accounts. True financial security comes from managing liabilities, not just cash flow. That’s where actuarial science plays a crucial role—by building a community-specific model that accounts for age, gender, care transitions, longevity, and real-world budget assumptions. In Powell’s firm’s database of 500+ communities, over 80% of clients are in “Satisfactory Actuarial Balance”, a sign of proactive stewardship.
The presentation doesn’t shy away from industry challenges, such as the risks of underpricing, the pressure to reduce benefits, or the potential for bankruptcy in poorly managed communities. But Powell remains optimistic: the CCRC model is sound, and with transparent governance and appropriate pricing, it can weather economic storms and demographic shifts.
His final note? Residents can be advocates—not just consumers. By asking thoughtful questions and understanding the principles behind their contracts, residents help ensure accountability and long-term viability.
Whether you’re concerned about financial security, curious about how your fees are calculated, or simply want to understand the system you’ve invested in, this talk offers clarity and confidence. It’s an essential watch for anyone living in—or considering—a life plan community.
[Footnote about questions: Please post your questions on the NaCCRA Forum. Recognizing that some viewers may have questions and comments, Mr. Powell asks that they be directed to NaCCRA, not to him directly. His consulting schedule and other demands on his time make it difficult to respond promptly. By using the forum, you make it possible for others to benefit from both your questions and the responses.]
👉 Watch the full talk here:View the Talk