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.
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.
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