Long-Term Care and Retirement

When it comes to retirement, among the leading concern is facing an event that requires long-term care and covering its costs. Despite of this, there is no reason to worry because you can prepare for it.

Currently, there are long-term care insurance policies available for care-related needs. Such policies cover the risks of needing care in retirement and protect assets needed for the surviving spouse. However, because of its variable costs, most people do not want to talk about long-term care insurance though they know that they may need it.

Current industry estimates that an average couple buying a shared policy would pay an annual premium averaging $2,700 for benefits worth 328,000 at age 55. Premium varies, depending on the types of care covered and location. Costs will be lesser if you buy long-term care insurance early. Just like any other insurance, LTCI can be bought at a lower cost when the insured event is more likely to be further in the future.

Financing Long-Term Care Costs

Ways of paying for long-term care varies, depending on the financial status of the person and the kinds of services to use. Most people pay out from their pockets – personal savings, pensions or retirement fund, personal income or proceeds from the sale of a home – while others receive help from their family and friends.

Benefits from Medicaid and Medicare can be of help, but they are not enough to fully support a person’s care expenses. Medicare only pays for a 100-day stay in a nursing home while Medicaid has strict requirements, and not everyone can qualify for its coverage. Only those people who have an asset of not more than $2,000 can receive Medicare benefits.

From all of these options, the best would be to plan ahead and use private payment options including reverse mortgage, life insurance policies and long-term care insurance.

Long-Term Care/Life Insurance Combo

Insurance providers now offer a solution that will allow you to buy long-term care insurance with the comfort that your premiums will not be wasted in case you didn’t need coverage.

Insurers are now offering a product that combines life insurance and long-term care features. The product, dubbed as universal life contract, requires a single premium and funds an accelerated death benefit ride to pay out long-term care benefit if necessary. This LTC/Life plan combines three features including Tax-Deffered Cash Accumulation Account “Asset Protection,” Life Insurance with an Income Tax-Free Death Benefit and Income Tax-Free Long-Term Care Benefit. With LTC/Life plan, you will have the opportunity to leverage a lump sum of your retirement savings for multiple benefits.

Only you can determine the best approach to be used when it comes to your long-term care. Plan ahead and take time to understand your needs and options in order for you to make informed decisions and not let the cost of care ruin your finances. Keep in mind that having a plan to pay is better than facing a care-related event with no plan at all.

References:

http://www.revmortgage.org/
http://www.investopedia.com/articles/retirement/06/newltcplan.asp
http://www.marketwatch.com/story/4-reasons-you-need-long-term-care-insur...
http://www.wsj.com/articles/SB10001424052702303425504577352031401783756
http://retirementvisionsllc.com/long-term-care.cfm
http://nihseniorhealth.gov/longtermcare/payingforlongtermcare/01.html