A recent study claims that 60% of adults worry about how they will pay for Long-Term Care (LTC), and 10% said it was their top concern. While two-thirds of consumers agree that most people need LTC insurance, only 16% own any.
Most people have never investigated LTC insurance and simply “think” it is too expensive. Many insurance agents who dabble in this product feed that myth by suggesting policies that are way too large for the consumer’s needs.
When someone needs LTC services, their lifestyle changes drastically. There may not be as many vehicles in the household when someone can no longer drive. There will be less cruises, trips to Branson, MO, golf, boating, camping, excursions, etc. when these things become difficult. There may even be less dining out.
Thus much of the money that was spent on fun things and travel can be redirected to help pay for needed LTC services. Savings can also help, but not by spending the savings, but rather by using the interest those savings generate to also help pay for services needed. Thus, only the shortfall needs to come from some other source, like LTC insurance.
It is also necessary to consider where you will be living, geographically. LTC costs vary significantly across our nation and this must be taken into consideration. We find that most people are pleasantly surprised that after investigating such insurance with an expert who understands how and where LTC services are delivered, and can choose among many carriers for the best fit based on your age and health, that the coverage is nowhere near as expensive as previously feared.
Let me give you an example: Lets take a 65 year old person who is only now investigating LTC insurance. Assuming decent health (typically blood pressure and cholesterol medications have no effect on pricing) a 65 year old could purchase over $850,000 of coverage for less than $2000 per year premium.
It matters not if this is a male of female, as not all companies charge females 50% to 75% more than males. The coverage suggested here is a 10 year benefit of $70/day, with a 90 day deductible and includes an automatic, built in 5% compound inflation factor on the $70/day benefit that will double that benefit every 15 years. The entire benefit is paid out for each day care is needed, even if in excess of the cost of services. The benefit is good in any setting, home or facility.
$70 per day, plus a Social Security check will often be sufficient to cover care in your own home, adult day care, or care in an assisted living facility. Many people do not choose to purchase a policy large enough to cover the more expensive nursing home, since less and less care is done there anymore.
If the 65 year old pays that premium for 20 years, they will have paid less than $40,000 in income tax deductible premiums. If they need care at age 85, they can collect at a starting rate of $185/day. Over 10 years of collecting they will receive $852,000 in benefits to use in paying for LTC.
Note that the benefit increases by 5% compounded while collecting to keep up with the increasing costs of care. This option is vital and is included in this example.
Less than $40,000 in tax deductible premiums to get over $850,000 tax free later to pay for LTC – is that as expensive as you thought?
If you are going to investigate this, investigate with an expert in LTC financing. At TheLongTermCareGuy.com, we have been doing nothing but the financing of LTC for 23 years now. Give us a call at (920) 884-3030 or (800) 219-9203 and lets discuss your situation.