As we gather with family to celebrate the holidays in the coming months, long-term care for our loved ones can often be top-of-mind. 70% of people 65 or older will require long-term care which means a significant number of us will have a family member in need at some point in our lives. On average, long-term care costs range from $50,000-$85000 annually depending on your geographical location. It may fall on the children for financial assistance. There are two ways to help cover the cost of long term care
- Long-term care insurance
This is an option to help cover LTC costs. There are a few issues with this type of coverage. It can be expensive, and the premiums typically increase as the policies age. If you do not use the insurance then all of the premiums paid into the policy expire upon the death of the insured. Review the premium history prior to purchasing a policy with the insurance company.
- Life insurance with a long-term care rider
A long-term care rider is a benefit on a life insurance policy that allows you to use part of your death benefit to cover long-term care needs while alive. To qualify, you must meet the medical need for long-term care (requiring help for two or more activities of daily living). Check with the insurance companies for their definitions for qualification.
Exercising a rider lowers the death benefit dollar for dollar. Insurance companies will allow you to use up to 90% of the death benefit for LTC. Most companies will pay as a monthly benefit. Children or other loved ones can pay the premiums for the older adults reducing their future financial liability.
We put together additional tips in a previous blog available here. Please contact Trost Financial Consulting to discuss your specific needs.
