LONG-TERM CARE

Considering long-term care costs are an important part of any long-range financial plan, especially in your 50s and beyond. Waiting until you need care to buy coverage is not an option. You won’t qualify for long-term care insurance if you already have a debilitating condition. Most people with long-term care insurance buy it in their mid-50s to mid-60s.


ARE THERE DIFFERENT TYPES OF LONG-TERM CARE PRODUCTS?

Yes, there two different types of Long-Term Care options:

HYBRID LONG-TERM CARE
Hybrid insurance combines long term care insurance with either life insurance or annuities. In the event that an individual does not use long-term care services, their beneficiaries will receive a death benefit or payment. Furthermore, hybrid insurance policies often offer a surrender value - which is a cash payment that is paid to the policy owner if the choose to cancel the policy. ­Typically, these policies are single payment premiums or flexible payment premiums for a certain number of years. What many people like about hybrid policies vs. traditional ones is the policy does three things instead of one, it provides a Life Insurance Policy, Long-Term Care ­Insurance, and Guaranteed Return of Premiums. Some hybrid policies also return a percentage of premiums paid if you cancel the policy before the end of the surrender charge period.

TRADITIONAL LONG-TERM CARE
Traditional long term care insurance gives clients the flexibility to customize their policy to fit their needs. For example, they choose the exact amount of coverage they want. They also ­specify when they want their benefits to start and how long they'd like them to last. This makes ­traditional long-term care insurance generally one of the most efficient ways to get the most coverage for the amount of premium paid. Typically, an annual premium is paid for life, although the premium payment period could be shorter in some instances. Also, premiums are not guaranteed to stay the same and may rise after purchase. If a policy is canceled or never accessed for long term care services, typically an individual will not receive refunds of for any past premium or any cash value. Generally includes a Cost of Living increase provision.

ADVANTAGES OF LONG-TERM CARE:

  • Long-Term Care guarantees the return of premium either in the form of benefits or a death benefit
  • The death benefit is paid out of the policyholder's heirs, whether or not they end up needing Long Term Care coverage
  • The premium rates are fixed-cannot be raised in the future
  • Preferential tax treatment for repurposing an existing life insurance and annuity policy via 1035 exchanges

WHAT DOES LONG-TERM CARE COVER?

  • Nursing Home Care
  • Assisted Living Facilities
  • Adult Daycare Services
  • In-Home Care Services
  • Home Modification
  • Care Coordination

WHAT TRIGGERS LONG-TERM CARE BENEFIT PAYMENTS:

A person is deemed eligible to receive benefits from “qualified” LTC policies if a medical professional determines that the person cannot perform 2 of the 6 "Activities of Daily Living” (ADLs) without the assistance of another person, of if they have a moderate to severe cognitive impairment.

Here's a list of the 6 Activities of Daily Living:

  • Bathing/Showering
  • Basic Hygiene: brushing teeth, combing hair, etc.
  • Dressing
  • Toileting
  • Walking/Mobility
  • Feeding

 Common ailments that often contribute to a person qualifying for LTC benefits include: 

  • Diabetes
  • Macular Degeneration
  • Arthritis
  • Degenerative disk/spinal disorders
  • Stroke/CVT
  • Injury/Falls
  • Dementia/Alzheimer’s Disease
  • Motor-neuron deficiencies/disease
Tips to Consider:
  • Buy sooner rather than later
  • Work with an independent agent
  • Start with a budget
  • Plan realistically
  • Go for a simple policy