Alternative Long Term Care Planning Strategies
Long-term care is one risk with many solutions. Companies keep
developing new products and planning strategies to address the needs of
consumers. Long-term care insurance is only one strategy to protect your
future.
LIFE INSURANCE WITH LTC
RIDER (HYBRID)
Let’s say that you have been thinking about purchasing LTCI for quite
some time, but you keep hesitating because what if you never use the
policy? (Wouldn’t that be the best thing that could ever happen?) Why
“waste” all those premium dollars?
Numerous carriers provide life
insurance with LTC riders. This is a single strategy that plans for two
financial risks: premature death and LTC expenses.
The life
insurance portion of the policy is generally permanent guaranteed
universal life or whole life. If you become ill, you can accelerate the
death benefit to pay for LTC, and you also have the ability to add a
rider to leverage the death benefit to about three times the original
amount. You can use the entire death benefit or a portion of it to pay
for LTC expenses. Ay unused portion is paid to your beneficiaries. If
you never need LTC, the entire death benefit is paid to your heirs
tax-free.
The LTC portion of the policy provides comprehensive
coverage in the setting of your choice. All levels of home care (skilled
and custodial), adult day care, assisted living, nursing home care and
hospice are covered.
The life insurance
carriers offering hybrid polices may or may not offer inflation protection.
This means that if you need care in the future, you will pay more out of
pocket. The way to compensate for the lack of inflation protection is to
purchase a higher death benefit which will increase your monthly payment for
LTC expenses.
If life insurance carriers feature inflation protection
in their hybrid policies, it is generally 3% simple and/or 5% compound.
There is a company that will even
pay cash so that anyone can take care of you, and requires no submission
of receipts!
These policies require two sets of
underwriting – one for life and one for LTC. You have to be insurable
for both.
Generally, to fund the policy, you need a single
lump-sum payment or a payment over 5, 7, or 10 years. Few companies
offer an annual premium payment.
If you have a life
insurance policy with some cash build-up consider replacing it with a
life insurance policy with LTC rider.
If you have received an
inheritance OR have funds sitting in a CD or money market account,
consider a life insurance policy with LTC rider.
LIFE INSURANCE WITH CHRONIC ILLNESS
RIDER
This policy is usually permanent universal
life. You can accelerate the death benefit to pay for your LTC. It only
requires one set of underwriting for life. It is an excellent strategy
for anyone not eligible for standalone LTCI or a hybrid.
SHORT-TERM LTC POLICY
These policies are not as robust as a traditional or NYS partnership
plan. An individual selects the pool of money they would like to have
for LTC. The pool of money provides a set monthly benefit over a one to
two year timeframe.
LIFE SETTLEMENTS
What happens if you can’t afford a
long-term care insurance premium or are uninsurable? A life settlement
may be an option for you.
A life settlement is the sale of an
in-force life insurance policy by its owner to a financial institution
as the provider. The policy owner receives a cash settlement offer
higher than the cash surrender value but less than the death benefit,
and all ownership rights and obligations of the policy are transferred
to the provider.
Certain circumstances make this a good planning
tool: if you have a life insurance policy that is about to lapse or is
no longer necessary due to changes in your estate; if you need more
discretionary income to maintain your lifestyle or purchase long-term
care insurance; or if you have been diagnosed with an ailment that makes
you uninsurable for long-term care insurance and you need funds to pay
for home or facility care.
ALTERNATIVES TO FIT EVERY PREFERENCE
The long-term care
planning market continues to evolve with new products and features that
accommodate all ages, preferences and lifestyles. There is no reason not
to plan for long-term care. The economy might be unstable but you can
bring some certainty and control into your future. Call us today at
800-422-2655 for a free consultation.
"I wanted to take
this opportunity to thank you for your time and hard work in helping us
obtain long term health insurance. You are a true professional in every
sense of the word. It was a pleasure working with you and learning about
a very complex subject."
VR- Rochester, NY
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