LONG TERM CARE INSURANCE FACTS AND BENEFITS
I hear it all the time!
I am not going into a nursing home, so why would I need insurance to pay for it?
Well, those that think this are mistaken.
Yes, Long Term Care insurance does help pay for Nursing Home, however, it also pays for home health care and assisted living. Long Term Care insurance can also protect assets from the government’s prying eyes! When you have a Long Term Care policy, you have a specified maximum pool of benefits. Did you know that with Traditional Long Term Care insurance you can get state assistance without having to liquidate your savings?
Example: If you have $250,000 in assets, and have a Long Term Care policy worth $300,000, you can shelter that $250,000 in assets/savings? As a result, you would only have to spend down the $250,000. The state would allow you to shelter that amount from the spend-down program and since you had $300,000 in Long Term Care insurance, you don't have to spend any of your hard earned money to get state assistance.
The fact is that there is a 75% chance that people over age 65 will need a form of Long Term Care insurance at some point in their lives. People often say I've looked into LTCi insurance, and it is the cost that made it where I couldn’t see the benefit. All Long Term Care policies can be structured to meet your future needs and budget. You can vary the benefits to include the length of time benefits are paid, the max monthly benefit, and/or the inflation percentage (the percent the maximum monthly benefit increases each year).
Below are the 2 basics forms of Long Term Care insurance's advantages and disadvantages:
Traditional LTCi: Advantages
Tax benefits: Federal deduction (tax filing status determines amounts) and states offer their own benefits (i.e. NC offers a 15% state tax credit of premiums paid each year)
Benefits increase per the inflation protection percentage selected.
Shelter Assets up to total benefits paid
Disadvantages
If you don't us it, you lose it. Just like your home owners or your auto premiums, if you don't use it, you don't get premiums back. Most Traditional Long Term Care policies have a maximum years (if you use the allotted monthly maximum every month) premiums MAY increase. Carriers reserve the right to increase premiums based on current claims. While this may not necessarily happen, it can happen.
Asset Based LTCi:
If you don't use it, you don't lose it. These policies feature a death benefit or cash value that you can borrow from or surrender
Many offer life time benefits:
You can use IRA (or other qualified) money to fund policy, so don't think of that you are purchasing a Long Term care policy, rather you are reallocating assets to help protect you against needing Long Term Care. Payments are flexible. You can opt to pay a one time premium, pay over 10 years, 15 years, 20 years, or for life. Most Importantly many have lifetime benefits.
