Long-Term Care Insurance Awareness Month
November is Long-Term Care Insurance awareness month. The goal is to bring awareness to the benefits of getting long-term care insurance for yourself while you are still young enough to afford it.
Many families become a caregiver to their loved ones, 78% of people that are in need of long-term care solely rely on friends and family members to take care of them. However, paying the cost of this care affects the family needing the care, and the extended family providing that care. Think not about yourself but your loved ones when you consider you may be the one needing extended care. Here are some choices to weigh:
If you have a retirement plan and investments, you may very well be able to pay for your own care. Yet this may leave nothing left for your spouse after you pass on. Then who will care for them after they’ve spent everything caring for you?
Your newly retired adult children may have to go from working full time to working part time in order to care for their older parents. In fact this is the case for 40% of caregivers, and nearly 90% of caregivers have to alter their work schedules permanently in some way to care for their loved ones. Not only will caregivers alter their work schedules to provide care to their loved ones but nearly 10% move closer to provide care.1
You can purchase long term care insurance
Here are some long-term care insurance options:
Buy traditional long term care insurance. This works the same way as health insurance. Premiums are due monthly, and they are paid for life. Just like health insurance they will raise your premiums. As a result this is not a good option.
Use of a fixed annuity that has a long term care income rider. These types of riders activate an income stream for a period of years should you need long term care.
Pro: This is an option for lump sum investments and for older individuals that may not be in the best of health.
Con: The annuity company is distributing the investors own money back to them for the first few years before they are on the hook to start paying out of the insurance company’s pocket. This option eliminates an asset and leaves the surviving spouse nothing for themselves unless a second annuity was purchased.
Use of a life insurance product. There are several insurance carriers in this space. There is a traditional life insurance death benefit that is much lower than a traditional life insurance product. Oftentimes the death benefit is only slightly higher than the sum of premiums paid. However, if one was so lucky to die without needing long term care, at least the heirs would get a return of premiums paid. For long term care benefits, there is a much higher sum of money that can be paid out monthly to offset claims costs that are often three times the sum of the premiums.
Pro: Life insurance can not raise premiums on an enforce policy. Premiums can be structured to be paid in over ten or fifteen years, thus allowing a “paid up” policy well before the elderly years. There are several policies that will accept IRA funds and several more that provide joint coverage for a married couple.
Con: Long Term Costs are high, and the insurance company knows for a married couple they will likely have to pay claims for one of them as the odds one would need LTC is 50%. For a ten year paid up policy, premiums could range between $10,000 and $15,0000 annually for ten years before it becomes paid up.2
I encourage you to ask your peers about long term care. You won’t have to ask around too long before someone you know has experienced it with someone they love.
If you’d like to chat about some options, use the scheduling link below to schedule a complimentary consultation.