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You Don't Know Long-Term Care 

What Is Long-Term Care? 

Long-Term Care is simply the personal assistance you may need to maintain your quality of life1. It is estimated that 7 out of 10 people over the age of 65 will need long term care at some point in their lives. 

Long-Term Care can consist of stays at an assisted living center, nursing home, rehabilitation center, or even at home health care either part-time or full time by family members or health care professionals. 

Some Long-Term Care Facts:

  • Health Insurance does not cover Long-Term Care. 
  • Medicare does not cover Long-Term Care.  
  • 15% of Long-Term Care stays last over 5 years today versus only 4.5% 10 years ago. 
  • Women live an average of 5 years longer than men. 
  • 75% of unpaid care givers are women. 
  •  63% of care givers pass away before their spouses. 
  • Today there are only about a half dozen insurance companies offering traditional Long-Term Care policies versus twice that many 10 years ago. 

The Cost of Long-Term Care:

Full time residency in a Long-Term Care facility or nursing home can cost on average between $4,000 and $7,000 per month or even more. While Medicaid pays for about half of all U.S. nursing home claims in the U.S. annually, you have to be near destitute (with assets of $2,000 or less) to collect. 

If you want to set aside funds to cover Long-Term Care costs for say 4 years, you will need $66,000 per year (based on $5,500 per month) with an approximate 5% per year cost increase which equals about $284,500 per spouse for the full 4 years. Now, that's a lot to set aside. 

If you choose to fund the cost of 4 years of Long-Term Care with money set aside, but you don't want to spend down your principal, you will need to set aside $1,189,600 per spouse assuming the same 5% per year cost increase and a 6% return on your money. 

The 3rd way to fund Long-Term Care, of course, is with Long-Term Care Insurance

There are basically 3 types of Long-Term Care Policies:  

  1. Traditional Long-Term Care Policy- In the Traditional Long-Term Care Policy, it's typically a separate policy with monthly premiums you typically pay for life. The costs can vary widly based on your starting age, exclusion period, monthly or daily coverage desired, number of years desired before coverage is used up, etc. Because there are so many variables affecting the cost, I won't attempt to even quote a range here. If interested in the Traditional Long-Term Care policy, it's best if you let me get you a personal quote based on your preferences. 
  2. A Universal Life Insurance Policy funded with a Single Premium- In this form of coverage, while most insurance companies offer single premium insurance policies, a few have created special policies geared for use in paying for Long-Term Care. Some even guarantee in addition to a death benefit, a guaranteed return of principal if Long-Term Care claims are not needed. 
  3. Riders on Whole Life or Variable Universal Life policies- Some Life Insurance policies offer optional riders (additional benefits) for small internal policy costs, for example, a Long-Term Care Rider. If Long-Term Care costs are incurred during the policy enforcement, you may draw on the death benefit to cover your Long-Term Care costs. For example, a $500,000 Life Insurance Policy would allow you to access your full $500,000 death benefit even if you just recently started to pay the premiums on your policy. 
A Long-Term Care Rider on a Whole Life or Variable Universal Life Policy can be a great way to cover potential future Long-Term Care costs, while at the same time potentially providing retirement income in retirement, and a death benefit at death. So, you can see with such a policy and rider, you can potentially kill multiple 'retirement birds' with one stone, so to speak. 

A Special Note: Some Long Term Care Policies or riders may even pay your spouse for at home care. 

In summary, Long-Term Care, while not part of my New Asset Allocation Model, because it can be such a large expense later in life, it does need to be part of Retirement Planning. 

Some Insurance companies I offer my clients with various forms of Long-Term Care coverage include: 

  • Hartford 
  • John Hancock Life 
  • John Hancock USA 
  • Nationwide 

I am licensed to provide Long-Term Care for residents of the state of Texas.

1 Long Term Care insurance products and services are not insured by the FDIC (Federal Insurance Deposit Corporation) or any government agency, and are not a deposit of a bank, and are not a condition to any banking service or activity. Long Term Care Insurance is a contract between you and a Life Insurance company. Policies are subject to underwriting, and a medical exam may be required to determine eligibility. 

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