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Three Options to Help You Insure for Long Term Care Expenses

Traditional Long Term Care Insurance

Traditional Long Term Care Insurance (LTCI) was developed specifically to help pay for assistance with the activities of daily living that other insurance does not cover. Long Term Care Insurance charges a fixed premium to protect against the risk of much larger out-of-pocket expenses in the future.

Premiums are based on many factors, including age at the time of purchase, level of benefits, and your health at the time of purchase. Because there are multiple choices in coverage, each policy is custom-built to satisfy your individual needs and budget.

Hybrid Plans

Hybrid long term care (LTC) products do not offer the same stand-alone coverage as traditional LTCI, but solve the “use it or lose it” concern. Even if you do not require long term care, your money can be used for other purposes. They also offer flexible funding options.

Life/LTC Insurance Policy 

A Life/LTC Insurance hybrid plan is designed to pay out LTC benefits if long term care is needed, and a death benefit to your beneficiaries if LTC is not needed. It is structured as a Universal or Whole Life Insurance policy that requires underwriting, plus the LTC rider. If the LTC benefit is used, the death benefit is reduced. If not, the full death benefit goes to your heirs tax-free. These products are beneficial to people who are seeking to:

  • Replace a CSRS or FERS survivor benefit, while protecting their long term care needs
  • Create a tax-efficient legacy, while protecting their long term care needs
  • Insulate themselves from potentially rising long term care premiums
  • Ensure that a benefit is paid out

Annuity/LTC Insurance Contract

An annuity is a contract for a structured series of payments that are normally purchased with a lump sum investment. The contract provides all the security and benefits of a fixed annuity, along with enhanced benefits if you need qualified long term care services. If you need access to funds for a predictable income stream, then it works just like a deferred annuity with guaranteed payments for a lifetime, a fixed number of years, or both.

An Annuity/LTC Insurance hybrid plan incorporates a rider that increases your payments in the event you require long-term care. Usually, long term care coverage is 200 to 300 percent of the annuity benefit. You receive annuity payments whether or not you end up requiring long term care. Advantages include:

  1. You can obtain Long Term Care Insurance with limited underwriting.
  2. You can pay for the LTC benefit with one lump sum, even using assets in an existing annuity to purchase this annuity.
  3. Your assets will transition to your heirs if you do not use them for LTC.

LTCI Benefit Variables 

  • Benefit Period – length of coverage in years
  • Daily Benefit Amount – $50-$500 per day
  • Monthly Benefit – $1,500-$15,000
  • Waiting Period – 30, 60, 90, 180 or 365 days
  • Home Health Care Benefit 
  • Inflation Protection
  • Shared Benefit Option

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