Powered by Max Banner Ads 

Affordable Long Term Care


 Powered by Max Banner Ads 

Presently 60% of those over 65 will need long term care at some point.  Medicare only pays for short term nursing care. Medicaid, on the other hand, will pay for long term nursing. But you must use an approved service provider. In addition, Medicaid will only accept people with very low incomes and very few assets. In order to qualify for Medicaid, you have to deplete your income first.

If you want to preserve your wealth, you would want to look for another option. There are some financial and insurance products that can be adjusted to serve double duty. They are purchased for a primary reason, but may also used to provide some backup protection against the rising cost of nursing care.

With Nursing home Cost’s running $4,000 to $6,000 a month and outpacing inflation, it is a small wonder that most seniors cannot afford the Long term Care insurance premiums. There are low cost Alternatives available for seniors who just can’t afford the rising cost of these Premiums.

Until recently, consumers had few choices when it came to long term care insurance. Traditional policies, which provided a certain amount of selected coverage, were the norm. Policies could be designed to cover care expenses for a few months, or much longer, even providing benefits for the insured’s lifetime.

For example, consumers could purchase coverage that would provide $100 a day in benefits for a period of three years. When calculated, the $100 daily benefit multiplied by 365 days in a year for 3 years would create a $109,500 “pool of money” available for care. This pool of money would pay for care in a nursing home, assisted living facility, adult day care, or in the personal residence of the policyholder once certain criteria had been met.

When the pool of money was depleted, the traditional policy would provide no more benefits. However, if the policy was never used, the owner would lose the investment of his or her premium payments. Thus, some seniors opted not to purchase these policies, deciding instead to rely on their families or current savings in the event that care became necessary.

With the cost of health care rising rapidly, and a single day in a nursing home costing $175 or more in major cities, self insuring is a risky proposition. Relying on family is an alternative, but not necessarily a viable one. Unfortunately, most families do not have the time, resources or ability to provide around the clock care to a loved one.

The Introduction of Hybrid Policies

The insurance industry realized that consumer needs were not always being met with long term care policies. While traditional policies were satisfactory for some, many others wanted more guarantees in the event their policy was never used.

In response to customer and agent demand, insurance companies have designed what can be best described as hybrid or linked policies. These policies combine the benefits of an annuity or life insurance agreement with a traditional long term care contract. With hybrid policies, the consumer has the guarantee of long term care benefits or, if no care is needed, the promise of insurance benefits to themselves and their beneficiaries.

The Long Term Care Annuity

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. For example, a policyholder with a $100,000 annuity who had selected and aggregate benefit limit of 300% and a two year benefit factor would have an additional $200,000 available for long term care expenses after the initial $100,000 policy value was depleted.

The policy owner would spend down the $100,000 annuity value over a two year period and then receive the additional $200,000 over a four year period or longer. In this example the contract pays $50,000 a year for a minimum of six years, but care will last longer if less benefit is needed. Again, if long term care is never needed the annuity value would be paid out lump sum to any named beneficiary.

These scenarios are only basic examples of how hybrid policies work. That is to say, the coverage will be different from person to person depending on age, health, gender, premiums and benefits requested. In order to get an accurate proposal, an illustration would be required from the insurance company.

These innovative products can meet consumer demands and provide more guarantees by combining traditional long term care insurance with the 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.

In my experience, over half the people who shun long term care insurance do so because they feel they will never need it. It is difficult to visualize going to a nursing home. Statistically, half of these people will be right.

However, there are a number of scenarios where the person may need some kind of assistance but never see the front door of a nursing home. In fact, most people who need long term care can receive care without ever leaving their home.

When you stop and think about it, the decision not to buy long term care insurance is a decision to self insure. This can be costly and possibly devastating.

The average cost of a nursing home today is $80,000 per year and rising. At that rate, it doesn’t take but a few years to grind through a modest estate. If both the husband and wife need nursing home care, the time to dissipate an estate is cut in half.

Conclusion

These new products, long term care annuities, provide the option to receive long term care benefits only if they are needed. There is no separate long term care insurance policy, no premiums and generally little or no underwriting.

 

Tags: , ,

Friday, July 24th, 2015 Wealth Preservation

 Powered by Max Banner Ads 

Receive "Five Wishes"

Fill out the form below to receive your free subscription to Annuity News and our gift to you "Five Wishes"

Five Wishes is a legally-valid tool you can use to ensure your wishes and those of your loved ones will be respected even if you can't speak for yourself. Five Wishes helps you express how you want to be treated if you are seriously ill and unable to speak for yourself. It deals with all of a person's needs: medical, personal, emotional and spiritual. Let your family and doctors know your Five Wishes!

Our strict privacy policy keeps your email address 100% safe & secure.

Five Wishes is changing the way America talks about and plans for care at the end of life. More than 12 million copies of Five Wishes are in circulation across the nation, distributed by more than 15,000 organizations. Five Wishes meets the legal requirements in 40 states and is useful in all 50. Five Wishes has become America’s most popular living will because it is written in everyday language and helps start and structure important conversations about care in times of serious illness.