Long Term Care Coverage
National studies done by the medical care profession predict that 30 to 40% of Americans, age 65 or older, will require some form of long term care in the course of their lifetime.* The average length of stay at a long term care facility is 2.4 years.** The average annual cost of nursing home care is $75,000 - over $6,000 per month.
When the economy was strong and the markets were rising, many people believed they could cover expenses related to a long term illness. As we move deeper into these troubled economic times, this type of “self insured” strategy may not provide the money you will need should you encounter a long term illness in the future.
Even if you are one of the few whose financial portfolio has not been adversely affected by the recent economic downturn, a prolonged illness could seriously impact retirement income of even the strongest investment portfolios. Despite the misconceptions of many people, long term care insurance is not designed to protect assets. It protects income. Long term care coverage provides a source of income to pay for prolonged care should it ever be required.
In the past, a primary concern of purchasing long term care was that if you did not need coverage, the hefty annual premiums paid in over the years were lost and those dollars wasted. Very similar to auto insurance premiums if you never have an accident.
Insurance providers have designed new coverage plans over the years that not only offer superior long term care coverage, but also provide a return of premiums if coverage is not used. Some unique plans provide a substantial death benefit by combining long term care coverage with a life insurance program. Your heirs may receive up to twice the premium you paid into the policy - on a tax free basis. There are many plans to choose from depending on your personal needs.
Example
Use your assets currently sitting in low bearing interest accounts to provide your long term coverage. Mrs. Client (age 70) can transfer $100,000 from a CD or money market fund to a special long term care coverage program. Just as in a CD or money market, the principal is guaranteed 100% and available at anytime.
The special long term care plan in this example provides her with $412,000 of long term care coverage which can used to cover the costs of a nursing home stay, assisted living facility or even home care services. If she does not need to use the long term coverage, her heirs will receive $138,000 (tax free) at her death.
Contact us for a complementary, no obligation analysis of your personal situation and a proposal on which long term care plans may be appropriate for your financial planning needs.
** U.S. Department of Health and Human Services; January 2004:
***2008 MetLife Market Survey of Nursing Home & Home Care Costs)