Interest in long-term care planning continues to be top-of-mind. The 2020 Presidential election campaign and the recent virus crisis has put long-term care front and center.
Long-Term Care Insurance has become a centerpiece of retirement planning. The guaranteed tax-free benefits offer the policyholder access to quality care, including care at home. In addition to the asset and income protection, the policies give family members the time to be family instead of caregivers.
However, as you read articles or speak with financial planners, you often hear that Long-Term Care Insurance is expensive. The fact is affordable plans exist if you shop around.
LTC Policies Offer Great Benefits but Premiums Vary Dramatically
While the features and benefits of today’s Long-Term Care Insurance have a few noteworthy differences, the premiums sure have significant differences. A study conducted by the American Association for Long-Term Care Insurance (AALTCI), national consumer education and advocacy group, reports that premiums for the same benefits can vary dramatically.
An analysis by the AALTCI shows a 60-year old male obtaining new Long-Term Care Insurance coverage can purchase a plan for under $2000 a year. This coverage would provide almost $400,000 of tax-free benefits when the person reaches age 90. In addition, in most states with federal Long-Term Care Partnership plans in place, the person would have additional dollar-for-dollar asset protection equal to the amount of benefits paid by the policy.
Jesse Slome, director of the AALTCI, said they found a premium spread of over 100% from the top-rated insurance companies for the exact same type of protection.
"Once again, it reveals the importance of comparison shopping and working with a knowledgeable Long-Term Care Insurance specialist."Jesse Slome, director of the AALTCI
Spouses and Partners Save Money on Long-Term Care Insurance
Married couples/partners usually have discounts available when they obtain coverage together. The AALTCI’s 2019 Price Index shows the average annual premium for a 60-year-old couple was $3,400. Many people today purchase coverage in their 40s or 50s to take advantage of much lower premiums. Premiums are intended to remain level based on the age, health, and benefit level purchased at the time they apply for a policy.
“There are smart ways to protect yourself and save money."
"For example, married couples should ask if a shared care option is available."Jesse Slome
Shared Benefits Provide Flexibility
Shared Long-Term Care Insurance policies provide additional flexibility as one person can use the benefits of another. If one spouse predeceases, their premium disappears, but 100% of the unused inflated benefit goes to the other spouse/partner. Some companies use a third “shared pool of money.” Be sure to ask a qualified Long-Term Care Insurance specialist about the differences.
“Most of my clients find huge value and peace-of-mind obtaining long-term care coverage prior to retirement. This way they know they have a plan which will not only protect their savings and lifestyle but will reduce the tremendous stress and burden otherwise placed on their loved ones.”Matt McCann, a leading specialist in long-term care planning
Family Caregivers Face Tremendous Burdens
Without Long-Term Care Insurance, future extended care is either provided by a spouse or children. Caregiving is tough both physically and mentally. Older spouses are just not able to provide care properly, and adult children will have their own careers and families to contend with in addition to caring for a parent.
Paid professional and semi-professional care is expensive. The cost of this care is not paid for in most cases by health insurance or Medicare. Since health insurance and Medicare will only pay for a small amount of skilled services, you will have to pay for most of the costs of your future long-term health care.
The future cost of care will drain your retirement savings and adversely impact your income, lifestyle, and legacy.
Income and Asset Protection is Key for Retirement Planning
“People work hard and save money so they can enjoy retirement without worry. They want an affordable plan that gives them care options as well as protecting assets. They usually want to avoid a nursing home and have the ability to receive care in their own care. Couples love the idea of shared benefits. The concern is always cost and unfortunately, they often think Long-Term Care Insurance is too expensive. They are very happy when they find out these policies are very affordable.”Brent Donarski who runs MyLTCspecialist.com
Since premiums can vary dramatically from one top company to another, experts suggest working with a specialist who works with the major companies. They can find the best coverage at the best value, so you don’t spend more than you need. Most financial planners and general insurance agents don’t usually have the expertise or ability to do this.
It is rare for most people in their 40s, 50s, or 60s to not know a family member, neighbor, coworker, or friend that has had any experience with long-term care. Every year you get older, your chance of needing long-term health care increases as well.
People require long-term care due to an illness, accident, or the impact of aging. Not only do you have a chance to need help with your physical needs, but you also have an increased risk of cognitive decline.
Do Your Research and Save Money
Start research before your retirement. Find the current costs of care services and the availability of partnership plans and tax incentives by finding your state on the LTC NEWS Cost of Care Calculator. Click here.
Be sure to find a trusted and qualified Long-Term Care Insurance specialist to help you find the most affordable coverage. Find a qualified specialist by clicking here.
Since there are very few Long-Term Care Insurance specialists nationwide, most will help consumers nationwide. You don’t need to use a local agent or advisor, and a qualified local specialist may not be available since the expertise is rare. The insurance company is not local, either. What is important is their experience, knowledge of underwriting and claims, and their ability to shop the major insurance companies on your behalf.
Today’s Long-Term Care Insurance is easy, affordable, and rate stable. For many people, Long-Term Care Insurance is a crucial part of their overall retirement planning.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
The fact is Long-Term Care Insurance is easy, affordable, and rate stable income and asset protection. Many people are not aware that these policies are custom designed. However, be careful since premiums can vary over 100% between companies for the same coverage.
Long-Term Care Insurance Specialist Helps You Save Money
This is why you pursue the help of a qualified Long-Term Care Insurance specialist. They should work with all the major insurance companies, understand underwriting standards with every company, understand policy design, and have claims experience. Find a specialist by clicking here.
Areas to Discuss with a Long-Term Care Insurance Specialist
- Partnership – Most states offer special policies that provide dollar-for-dollar asset protection. The Long-Term Care Insurance Partnership Program might be one of the best-kept secrets in retirement planning. Make sure the specialist explains this program and how it might help you.
- Tax incentives – There are federal tax incentives available for some people. If you own your own business, be sure to ask.
- Health Savings Accounts – If you have an HSA you can use the pre-tax money in your account to pay for the premium.
- Asset-Based or Hybrid policies – These are life insurance or annuities with a rider for long-term care. Careful, only a handful are actually a long-term care benefit. However, one of these policies can provide you with the flexibility of both a long-term care benefit or a death benefit. They are expensive but can be paid with a single premium.
- Health and Family History - Make sure the specialist asks you detailed questions about your health, family history, and retirement plans. Underwriting criteria vary with each insurance company. If they are not asking you detailed questions, then find another specialist.
Cost of Care Varies Depending on Location
Use the LTC NEWS Cost of Care Calculator to find the current and future cost of long-term care services and supports. You will also find the availability of partnership plans and tax incentives that may be available. Click here for the map.
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