Long-term care insurance seemed like such a great idea. Buy a policy when you're in your 50s or 60s, while you're still relatively healthy, pay your monthly premiums and in return, you'll have help managing the astronomical costs of a nursing home, assisted-living facility or personal aide when the time comes.
This insurance was not only supposed to help you afford quality care, but it also was supposed to help protect your nest egg and legacy. You wouldn't have to spend all your hard-earned retirement savings on getting old.
But long-term care insurance hasn't exactly worked out that way. The past few years have brought sky-high premium increases for most policyholders. In some cases, premium prices have doubled in the past few years.
Price hikes like this have forced consumers to make some unpleasant choices. Some seniors struggle to pay increasingly unaffordable premiums, digging into savings and cutting living expenses to hang onto the coverage they fear they may need soon.
Others try to keep premiums affordable by cutting back on the number of benefits their insurance will cover, leaving themselves exposed to the risk of unaffordable out-of-pocket costs. (The eventuality these policies were supposed to prevent.)
Still, others are abandoning policies for which they may have already paid tens of thousands of dollars in premiums. Meanwhile, the high cost of long-term care insurance and the reduced amount of coverage is dissuading new consumers from buying policies, even as the cost of long-term care continues to rise.
Asset-Based LTC Plans and Other Alternatives
Some insurers have added “living benefit” riders to their permanent life insurance policies. These riders vary by carrier but can offer coverage needs for qualifying terminal illness, chronic illness, critical illness, or critical injury. The holder of such a policy may access the available funds once a qualifying event has occurred. However, these funds are limited to a portion of the policy’s contractual death benefit, so it isn’t going to fully cover care for an extended period of time, but it is a nice stop-gap.
Another option is an asset-based long-term care policy. These offerings use time-tested concepts of life insurance and annuities as their foundation by leveraging existing assets to help pay for LTC expenses only if they are needed. And, if LTC expenses aren’t incurred, then the assets pass on to your beneficiary – your family or a favorite charity. Also, because of the underlying tools, your premiums won’t increase, you can have a single or joint contract, and options exist to cover you throughout your lifetime.
Long-term care considerations are not those in which we’d recommend to self-insure. Too many variables exist that could threaten your financial stability and there are some great solutions that will protect your legacy and ensure your wealth transfer needs are met.
Need help with insurance, including Asset-Based LTC or life insurance with living benefits?
Contact Insight Financial Group, (940) 489-5600.