Long-Term Care Insurance: Lifeline or Long Shot

Find out if a policy will help protect the future of your family.

Long-term care can be one of the largest expenses you or your family will ever face. Yet it’s often overlooked. Long-term care may be needed if you’re unable to care for yourself because of an illness, disability or disease. No it’s not a topic anyone wants to delve into, but lack of preparation can be downright scary.

Did you know that a nursing home can cost around $100,000 per year? Government data indicates that 70% of Americans over age 65 will need some type of long-term care. But about half of Americans according to this same poll have done little or no planning or preparation for their senior years. Whether to purchase long-term care insurance really does depend upon your individual situation, which should be comprehensively evaluated by a financial professional.

If there’s substantial money invested properly over the years, there may be enough saved to cover potential illnesses without paying out years of insurance premiums. Medicaid is only available to very low income families. So if there’s not much money at all, it may be best to spend down accounts to qualify for Medicaid rather than spending on long-term care insurance.

How do you know if long-term care insurance will be a good fit for you?

Consider discussing answers to these questions with your financial and insurance professional:

  • What are all of my assets worth and will it change in the next decade or two?
  • What policy premiums can I afford over the years?
  • Will my income fluctuate over the next decade or two?
  • How will retirement affect my income and ability to pay premiums?
  • How much would a policy premium increase if I wait five years to purchase it?

If you’re wondering how much long-term care insurance could potentially cost, there are a few things that will determine your premiums:

  • Age and gender – The younger you are, the better the chance you will be approved for a policy and the less expensive it will be. Women may live longer and have more of a need.
  • Health and family history – If your family history has a chronic condition such as heart disease, it may be a good idea to get coverage. Although if you already have such a chronic condition, it may be tough to be approved.
  • Amount of Coverage – There are many options, from buying a small amount of coverage to buying a policy that keeps up with inflation.

There are other details to know about a policy, including when the insurance starts to pay and how it pays benefits, such as monthly lump sum or reimbursement. Also, it’s important to know the answers to questions like, does the policy include inflation protection, what is the non-forfeiture benefit, is there a pre-existing condition waiting period and what are the cancellation terms? All of these policy factors should be discussed in detail with your financial and insurance professional.

Preparation for long-term care is an essential part of your retirement plan. If long-term care is needed and there’s no insurance policy, hundreds of dollars per day could deplete years of investing in a matter of months. To determine whether long-term care insurance fits into your retirement plan, your assets, income and other resources must be considered along with personal risk factors. To find out whether a long-term care policy fits within your retirement roadmap please reach out to our team at Bayntree Wealth Advisors at info@bayntree.com for more information schedule an appointment with us today!

Bayntree Wealth Advisors, located in Phoenix and Scottsdale, Arizona, provides comprehensive financial planning and wealth management. The Bayntree team specializes in all aspects of financial health, including retirement planning, risk management, investment advice, tax strategies, estate planning and insurance.

Bayntree does not provide specific legal or tax advice. Please consult with your tax advisor or legal professional for guidance with your individual situation.

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