Making Long-Term Care Insurance Even More Affordable Now
With longer life expectancies and economic uncertainty, many are concerned about how to retire comfortably. But this issue extends beyond just you—it's a family matter that impacts all generations. Aging and the need for future for long-term care services are challenges that ripple through loved ones, affecting family finances and emotional well-being.
Even if you've diligently saved and planned for retirement, those efforts can quickly unravel when you factor in the rising costs of long-term care services.
In fact, surveys show that most people over 40 recognize the need to plan for potential long-term healthcare expenses. We start noticing changes in our health and stamina in our 40s, as our bodies aren't what they were in our 20s. Unfortunately, conditions like dementia become more prevalent as we reach our 70s and 80s, often with cognitive changes appearing much sooner. Planning now can ensure that your hard-earned savings remain intact and your future care needs are covered.
Many people shy away from pursuing a Long-Term Care Insurance policy due to concerns about cost. While it's true that long-term care services are rising rapidly across the country, LTC Insurance can still be affordable, especially for individuals in their 40s and 50s who are in relatively good health. Even those in their 60s and beyond can find affordable long-term care solutions.
The benefit of Long-Term Care Insurance lies in its flexibility, allowing you to customize your policy by adjusting benefit levels and premiums to suit your budget and future care needs. While some policies can be expensive, premium costs vary widely between insurers, giving you the freedom to select coverage that fits your budget. You have control over the policy's benefit design, ensuring you can have an LTC policy that will offer you access to quality care at a premium you can afford.
There's no denying that long-term healthcare is expensive and becoming more so yearly. Most long-term care is provided at home or in assisted living facilities, but these services come at a high price due to increased demand and rising labor costs. Nursing homes and memory care remain very expensive as well. Planning now with a specifically designed LTC policy helps safeguard your income and assets from these rising care costs.
LTC Insurance - Affordable and Custom-Designed
Facts are facts. Long-Term Care Insurance can be a very affordable way to address the financial costs and burdens of aging, at least for most people depending on your age and health when you obtain coverage.
These policies are custom-designed, and Jesse Slome, the director of the American Association for Long-Term Care Insurance, says there can be smarter ways to purchase these crucial policies.
By smarter, I mean saving money and having some insurance protection in place because some protection is always going to be better than having none.
Long-Term Care Insurance policies can be tailored to meet a variety of budgets, offering flexibility in benefit options and coverage levels. One effective strategy is choosing an appropriate inflation protection rider.
A common choice is 3% compound inflation protection, which increases your benefit amount each year by 3%, while keeping your premium level. This approach ensures that your policy keeps pace with the rising cost of care over time without placing a strain on your finances.
Inflation Options Can Be Adjusted for Affordability
Slome recommends considering using 2% instead of 3%.
Inflation's been tame for the past decade and of course no one can predict the future but even if you have to supplement future care costs from your Social security or retirement assets, that's going to be doable. And, if inflation increases, well then so typically does the value of your assets and the income one earns from CDs and bonds.
Some LTC Insurance specialists recommend using a lower inflation percentage with higher initial benefits. Either way, there are ways to make an LTC policy more affordable without giving up value.
Partnership LTC Insurance Provides Dollar-for-Dollar Asset Protection
Remember that some states require 3% compound inflation to qualify for their Long-Term Care Partnership Program. The program provides consumers who own a partnership-certified policy additional dollar-for-dollar asset protection or 'asset disregard.'
One way to save money is to reduce your monthly or daily benefit or the initial policy limit to compensate for the cost of inflation. The importance of the partnership program should not be ignored.
A partnership policy might be one of the biggest kept secrets in retirement planning. With one of these unique policies, you can provide a legacy no matter what happens to you.
Shared Spousal Benefits Provide Flexibility and Affordability
Another option Slome mentions is shared spousal benefits, which many companies offer.
This is an incredible benefit not offered by every insurance company but for a couple, I think it's the best-kept secret today.
Slome says that it is an incredible planning tool for couples.
With the shared care option, if one spouse exhausts their benefits, they can tap or access the benefits available in the other spouse's benefit pool.
An LTC policy with shared spousal benefits allows a couple to purchase two smaller plans and connect them. This can provide outstanding value at a lower cost.
Brent Donarski, a 30-year veteran specialist in long-term care planning, says many of his clients select shared benefit options.
They see incredible value in both the lower cost and the asset protection provided by these plans.
Donarski says his clients are often amazed at how affordable today's Long-Term Care Insurance really is.
They know they don't want the responsibility of caregiving to be placed on their children. They desire to protect their savings and lifestyle while knowing they will have the resources to choose quality care when they need it. When they see how affordable LTC insurance really is, it becomes a common-sense decision to get it in place.
Long-Term Care Insurance Works for Families
American families are benefiting from these insurance policies. In 2023, over $14.1 Billion in Long-Term Care Insurance benefits were paid to American families. Thus, these families had the guaranteed tax-free resources to pay for quality care at home or in a facility without draining savings or forcing family members to be caregivers.
Slome says every insurance company has its own pricing and specific policy features.
This is a case where you really benefit from working with a knowledgeable specialist, someone appointed with multiple long-term care insurance companies.
Research Tools
Since these plans are custom-designed, you should first research the cost of care where you live or where you expect to live once you retire. LTC News does an annual survey of long-term care costs and projects the future cost of care in every metro area in the United States. It is the most comprehensive survey in the country.
The LTC NEWS Cost of Care Calculator can be used to help you and your LTC Insurance specialist design an affordable LTC policy to address the costs you will face in the future.
Plus, LTC News offers many other resources, including information on available tax incentives and partnership plans in your state.
Be sure to get the help of an experienced Long-Term Care Insurance specialist. Most insurance agents and financial planners are not prepared to provide you with correct information and accurate quotes. They also tend to work with only one or two insurance companies.
Remember, every insurance company must file and get approved their products and pricing with each state's insurance department. No individual insurance agent, agency, or advisor can give you special deals. However, premiums vary substantially between insurance companies for the same benefits.
A Long-Term Care Insurance specialist can match your age, health, and family history with the insurance company that offers you the best coverage at the best value. You can then see accurate quotes and comparisons from all the top-rated insurance companies that offer long-term care solutions.
Long-Term Care Planning Means More Than Money
The issue of future long-term care is both a cash flow and a family problem. Most experts recommend purchasing a policy before retirement, ideally when you're still in good health. In fact, the majority of people buying Long-Term Care Insurance are in their 40s and 50s.
Premiums are influenced by your age at the time of application, the level of benefits you choose, and your health status. Various types of policies are available in most states, including traditional plans (with options for partnership-certified policies), asset-based policies that offer death benefits, and short-term care plans designed for shorter coverage durations.
It is All About Family
Long-term care planning is fundamentally about family. The need for extended care often affects multiple generations simultaneously, placing a heavy burden on family caregivers—physically, emotionally, and financially.
Caregiving responsibilities can disrupt careers, strain relationships, and even negatively impact the caregiver's own health. While your children may now express a willingness to be your future caregiver, they may not fully grasp the physical and emotional toll involved. It's essential to allow your loved ones to be just that—family members—without adding the responsibility of balancing their careers and personal lives with the demands of caregiving.
Surveys consistently show that most people don't want to burden their adult children. They prefer not to place the full responsibility of caregiving or managing future care on their families. Long-Term Care Insurance offers access to quality care options, such as in-home care, without draining personal assets. It not only protects your finances but also eases the stress and anxiety that otherwise falls on your loved ones.
By planning now with affordable Long-Term Care Insurance, you make aging easier for those you care about. However, because LTC Insurance is medically underwritten, it's best to start planning when you are younger and healthier—ideally in your 40s or 50s.
However, even in your 60s and older, a specialist can often find affordable solutions. You must start by discussing your situation with a specialist and make sure you have a plan for the physical, emotional, and financial burdens that aging will have on you and those you love.