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Asset and Income Protection

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Hitting that century mark or even living well into our nineties is hard to fathom – so much so, that a lot of us are guilty of just ignoring the “what ifs” of making it that far in life. The facts show that we ARE living longer and longer. This is great news but living longer may create some pretty severe financial challenges.

According to the Government Accountability Office, a husband and wife both aged 65 have approximately a 47% chance that at least one of them will live to his or her 90th birthday and a 20% chance of living to his or her 95th birthday.

As life expectancy continues to climb, the fear of outliving one’s assets has become top-of-mind for most Americans. Today, it is becoming more important than ever to put retirement strategies in place that guarantee lifetime income.

You need to put an income strategy in place that helps you to maintain your standard of living throughout your retirement years with income you can’t outlive. Planning is important, in order to assist you in eliminating a potentially devastating financial disaster. You want to live out the golden years of your retirement as stress free as possible. So make sure you plan for your future long term health care needs as well as your income needs!

With long-term care costing as much as $250 a day, it doesn’t take long to completely deplete a lifetime of savings—even if you’re “lucky” enough to only need it for a relatively short period of time.

With Nursing home Cost’s running $4,000 to $8,000 a month and outpacing inflation, it is a small wonder that most seniors cannot afford the Long term Care insurance premiums.  If you consider the average annual cost of elder care, you may rethink the (much) smaller annual premium involved in owning a LTC policy.

* The average annual cost of Nursing Home care – $83,179
* The average annual cost of Assisted Living – $44,345
* The average annual cost of Home Care – $38,317

These costs are in TODAY’s dollars. With the average stay in a nursing home coming in at around 3 years, the average cost per person is around $241,219. This theoretically could become the greatest financial risk of your life.

The wealthy can be reasonably sure their savings will be enough to pay directly for long-term care, whatever its duration. And despite concerns about quality, Medicaid is there for the poor.

But what about consumers with midlevel savings—in other words, most people? These consumers need long-term-care insurance the most. They tend to have too little savings to pay for even a couple of years of care without impoverishing themselves and their families, and too much to qualify for Medicaid.

It’s unforeseeable what your nursing home and assisted living costs may be…we’d all like to hope that this is something we’ll never face. But, the facts aren’t on our side. Planning for it now, rather than later, is simply a wise thing to do.

The industry touts scary statistics about the probability of ending life in a nursing home. It’s not uncommon to see ads claiming “70% of all seniors will go into a nursing home,” or “the average stay is two and a half years.”

It may be more useful to learn that 67% to 70% of seniors who do go into a nursing home are discharged within 90 days, and that after two years, less than 6% of those admitted will still be there. Actually, out of 40 million American seniors alive today, approximately 1.5 million currently live in nursing homes, about 3.7%.

Another important point: Most long-term-care policies don’t pay anything until the person has been in a nursing home for more than 90 days. If more than two-thirds of those going into nursing homes leave before 90 days are up, it is unlikely that most consumers will receive any benefits at all.

For those with little wealth, a policy will never be suitable. They will be covered by the long-term care provided by Medicaid. For individuals with incomes of at least $250,000 a year and substantial savings, the smarter move might be to either self-insure or use their resources to pay for high-level in-home health care.

For mid-wealth individuals, the answer isn’t so clear. The average annual premiums for policies sold to seniors run around $3,500 per year. But few—if any—policies pay 100% of the daily private pay rate, currently about $250 per day. Policies typically pay $150 a day. So, even a resident with a policy will have to dig into savings to pay the difference.

But instead of buying a policy and paying premiums, the consumer could set aside savings for long-term care. At $3,500 a year, in 20 years he or she could have $70,000 plus interest. In the statistical unlikelihood they end up in a nursing home, they could use these savings to pay the bills.  The best option instead of buying a long term care policy and paying premiums, the consumer could set aside savings in a long term care annuity.  If you don’t use it, you don’t lose it.

The newest addition to the hybrid marketplace is the long term care annuity. This product also functions exactly like a fixed annuity, but has a long term care multiplier built into the policy. There is no premium rider attached to this medically underwritten annuity policy. Instead, a portion of the internal return in the contract is used to pay for the long term care benefit.

Long term care coverage is calculated based on the amount of coverage selected when the policy is purchased. The insurance company offers a payout of 200% or 300% of the aggregate policy value over two or three years after the annuity account value is depleted.

Being financially ready for the possibility that you will require long-term care is an important part of retirement planning. But too many people are still preparing merely by hoping for the best.  Buying insurance is basically gambling. You calculate the costs, risks and benefits—and hope that you come out ahead.

Fixed index annuities have answered the retirement income needs for individuals facing a wide variety of retirement planning scenarios. By providing exposure to market-based gains and eliminating losses, FIAs have proven to be an excellent alternative to the stock market.

The past few years have taken a brutal toll on your investment portfolio and your sanity. You are tired of the stress that comes with the ups and downs of the stock market. You’re tired of seeing your hard-earned retirement savings lose value with big market drops.

You need more stability. However, you’re looking for a bit more earning potential than what today’s bond options or Certificates of Deposit (CDs) can provide you. You are looking for a safer alternative to the stock market, one that provides principal protection with some exposure to market upside.

Annuities come in all shapes and sizes, and “lifetime income” is just part of the story. If you are a Senior concerned about the High Cost of Long term Care but really cannot afford the High cost of Long Term Care Insurance Premiums, then a Hybrid Annuities with a Long Term Care Rider may just be the solution you seek.

These innovative products can meet consumer demands and provide more guarantees by combining retirement benefits along with traditional long term care insurance with the many advantages of annuity policies. Thus, consumers who utilize hybrid policies can avoid self-insuring against catastrophic long term care related expenses and have the peace of mind associated with a comprehensive plan

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Monday, April 15th, 2013 Wealth Management, Wealth Preservation

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