Alternative Long Term Care Solutions  

About 70% of retirees will need some type of long term care coverage.

I’ve had clients who have watched their parents’ entire estates taken for long term care (LTC) costs. 

Long term care policies are a “use it or lose it benefit", and that's the difficulty for most people.  If you pay for long term care coverage and suddenly die, the premiums are lost.  Only about 4% of the population have LTC coverage, yet 70% will require benefits during retirement.

My wife and I are under 60.  I recently received a price quote for long term coverage for $590 per month.  And that cost can go up, Ouch!

There are three new approaches to providing LTC coverage which may suit your needs better. 

A few life insurance companies (not all) can include LTC type benefits in their policies. 

Here’s how it works.  You purchase a $500,000 life insurance policy with LTC benefits.  If you cannot perform two of the six activities of daily living (dressing, toileting, transferring, continence, eating, bathing), your policy will pay up to $200,000 for long term care prior to your death and the remaining balance will be paid to your beneficiaries.  

If you die without needing any long term care, the entire $500,000 comes back to your beneficiaries income tax free. This is a win win not a use or lose situation.

Another alternative for covering a husband and wife is to purchase a “second to die” single premium life insurance policy for LTC. In this case, you could purchase a $300,000 policy that pays long term care benefits of $6,000 per month for 50 months on both the husband and wife. 

If the LTC benefits are not used, upon the second death $300,000 is paid income tax free to your beneficiaries.  If $100,000 is used for long term care benefits, $200,000 will be paid out at the second death.

Also newer annuity contracts can provide a doubling of benefits for long term care needs when you are not able to do two of the six daily living activities.  If your lifetime income annuity is already paying $20,000 you could get up to $40,000 annually for five years.

My clients who have watched their parents’ estate vanish and who wish to pass wealth on to their children find these policies a refreshing change to the use or lose it proposition.

If you'd like to discuss LTC coverage or the new alternatives available please give me a call.

Thanks,

Cory Payne

Beehive Insurance Retirement Planning Services

302 West 5400 South #101

Murray, UT 84107

801-685-6860 Office

801-554-7797 Mobile

801-685-2899 Fax

cpayne@beehiveinsurance.com