I have a friend who says that when he wakes up in the morning and recognizes the guy in the mirror it is going to be a good day. Of course he is kidding, but have you thought of what will happen to you when you get older? Ask yourself, “what would happen to me or my spouse if I need Long-Term Care and what will happen to my investments and lifetime savings?” As we get older those type of questions seem to burn in the front of most people minds.
Conventionally, our parents would purchase traditional long-term care insurance. However, this route is not always best for families and I will explain why. The insurance companies have experienced a lot more claims than anticipated and are now beginning to exit the market place. What was once an easy policy to buy is now becoming increasingly difficult because of the lack of insurance companies willing to take on the risk. The traditional long-term care insurance typically had a benefit period (the amount of dollars or days that would pay for your care), and these premiums were only guaranteed for one year. Not only are these premiums not guaranteed for long durations, they also carry the additional downside of increasing in cost over time. In some cases these policies would not even pay for at-home care or assisted living care.
Here’s one other question I would like to pose, ‘What if for years you pay on those premiums and are fortunate enough to never have to use your policy?’ Doesn’t matter, it will be gone.
Fortunately, there is a solution to this issue and it is what we call the Hybrid Long-Term policy. What this is, is a Life Insurance Policy that will have a Long-Term care rider on it. Why is this important you ask? For starters, these premiums are guaranteed for the entire life of the policy and if you never use it for long-term care then the death benefit will be passed to your heirs, tax-free. Hybrids will also pay for at-home care and assisted living care if this is of importance to you. Quite frankly, the last place anyone wants to end up is in the nursing home and given the choice most people would opt for the at-home or assisted living. Now I know what some of you are thinking, ‘What does it matter I will not know the difference’. While this may be true in some cases, you do have spouses and family members to think about.
There is more information and additional benefits that go along with this type of policy, but I believe you get the idea. There are some substantial differences between insurance companies so be sure you get help choosing a policy from an experienced advisor. The right advisor will put together the correct plan demonstrating how a policy can conserve your life savings, and setup a roadmap for paying towards such a plan.