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Retirement Tip of the Month

Long-Term Care Insurance Options

Long-Term Care Insurance Options

Around 70% of Americans who reach the age of 65 will end up needing long-term care for some amount of time in their remaining life, says a study by the U.S. Department of Health and Human Services. And, while it’s true, some people will get by with unpaid care from their own family members, nearly half will end up needing some form of paid assistance. And, what’s more, the costs of care are highly variable.

How long will you end up needing care for? How intensive will your needs be? These are both factors that, obviously, impact cost. And, they’re factors that you can’t predict. The cost of care may also be impacted by where you live in the country.

Traditional Medicare does not cover long-term care. Some Medicare Advantage Plans might offer supplemental coverage for services like meal delivery and rides to medical appointments. However, these benefits are limited. The largest single funding source for long-term care is Medicaid, the joint federal and state program that covers lower-income Americans. As we said, income limits vary from state to state. However, you typically can’t get Medicaid unless you exhaust most of your savings beyond your primary home and vehicle.

Even then, you might not qualify for long-term care. If you have a pre-existing condition that has already made it difficult for you to perform basic tasks, it may prevent you from being insurable.


If you decide to go ahead with a policy, though, there are a number of further considerations.

According to studies by the Society of Actuaries, the average time for claims in 2014 which lasted longer than a year, ranged from three and a half to four years. Typically, two to four years is a good ballpark estimate. The longer the benefit period, and the higher the benefit policy amount, the higher the cost will be for you, the policy buyer.

Those who do not have enough saved up to self-insure may be able to buy a long-term care policy during their earlier working years. Then, there may be a point when their assets become high enough to support long-term care. Then, they can either terminate their policy altogether or modify it for less coverage.

In general, long-term care usually turns into a less-than-deal investment past a certain point. If you don’t use it early, it can be a good play. This is because you’ve paid fewer premiums upfront and are using the benefits. The longer you take to use the policy, the lower your returns on it will be. If you end up using the policy in the first five to ten years, though, it can be very advantageous.

However, the longer you take to use the benefits, the more sense it will make to instead put the money aside for yourself, so that later, you can afford to just self-insure. Of course, there isn’t even a way of knowing if and when an event will happen that puts you in need of long-term care… But, it can be good to have money “stashed away” even so. You could potentially use it for other unexpected expenses, after all.

One way you might be able to provide for long-term care? An annuity. These products come with specific benefits that make them useful for it, a well as a number of other benefits that make them a useful financial vehicle in general.

The right type of life insurance might also be useful for this. Life insurance, unbeknownst to many, isn’t just there to leave a benefit to your loved ones when you die. It might be a way to stash away some money that you, while still alive, could use. Reach out to us to learn more.

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