Long Term Care Insurance
When you think about your later years, you probably don’t foresee yourself being dependent on family members or being limited on the care you can receive. As people live longer, so do the odds of needing some type of long term care. These services are extremely expensive and can wipe out your entire estate.
A long term care (LTC) insurance policy helps cover the cost of long term care, picking up where health and disability insurance leave off. LTC is for those that need help with daily activities such as eating, bathing or dressing over an extended period of time. LTC is generally provided in the patient's home, an assisted living facility, or in a nursing home.
Insurance companies offer 3 types of long term care policies.
1. Stand-alone policy long term care policy. This policy pays you back for the costs incurred when you utilize long term care services.
2. Life Insurance with a long term care rider. This is a life insurance policy with a special rider that allows you to access a monthly amount of the death benefit to pay for long term care needs. If you never need the long term care coverage, the full death benefit is paid to your beneficiaries –income and estate tax free. If you use some of the long term care benefits, the unused portion of the death benefit remains with your policy and is paid to your beneficiaries. The long term care rider has all the bells and whistles of a traditional stand-alone policy.
3. Annuity with LTC benefits. This is simply an annuity where you can access funds in the annuity to pay for long-term care costs. The coverage is usually based on a percentage of your initial premium investment. These policies are issued without regard to your health, so you can obtain coverage if you've been turned down for a stand-alone policy.
Seven Myths of Long Term Care Insurance
- I won’t need it
- Long term planning and long term care insurance are the same.
- I missed the planning window, so why bother.
- If I make it to age 65 some government program will pick up the tab.
- Why save? No one knows how much long term care will cost.
- My family will take care of me.
- Where I live now is the best place for me to age.
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