I mention to all my clients their need for Long Term Care insurance. Many times I hear “I’m never going into a Nursing Home, I don’t need it!”… Well, if that’s you, guess what, you need Long Term Care insurance! Long Term Care insurance (LTCi) keeps you out of a nursing home just as much as it can help pay for one. LTCi will help pay for home health aid/nursing, assisted living and nursing home. You don’t want to go to a nursing home? Consider Long Term Care!
What percentage of people will need Long Term Care in their lives? According to Administration for Community Living (part of Department of Health and Human Services), about 7 out of 10 people turning age 65 will need long term care services during their lifetime. The average length of care is 3.7 years for women and 2.2 years for men. While about 1/3 of people will never need long term care services, about 20% will need it 5 years or long.
The average monthly cost of care continues to rise. Averaging Home Health Care, Assisted living, and Nursing Home, you can expect anywhere from $5,500-$6,500/month. Obviously, a Nursing Home can and generally does cost more than that, but these figures factor in average monthly cost coupled with average length of care. A good assisted living facility cost approximately $3,500-$4,000 per month. I have provided some figures below.
Traditional Long Term Care insurance: You pay the premium, you need it for LTCi, you use it. You don’t use it, you lose it. Federal Deductions and State tax benefits varying per state. Traditional LTCi has the ability to shelter assets when it comes time to qualify for Medicaid (this is an entirely separate conversation, so feel free to reach out). Premiums can increase due to low lapse ratio (that’s right! Insurance companies make money when people pay premiums and then let their policy lapse), high claims or increasing cost of medical care.
What we call Asset Based LTCi can be either be some annuities with LTCi riders, or Life Insurance.
Asset Based Long Term Care: You pay premium, you need it for LTCi, you use it. If you don’t use it for LTCi, you don’t lose it. Since most “Asset Based” LTCi is essentially Long Term Care built on a life insurance chassis, your goal is to provide protection for LTC but should you never need LTC, you have other benefits. The other benefits if you do not need it for long term care include: Death Benefit, Cash Value Accumulation, and Return of Premium. Asset Based LTCi is really becoming a revolutionary way to insure against the risk of LTCi because premiums are guaranteed to never increase and one way or another, you are going to get benefit from it!
See Figures below for an idea of cost and benefits:
|Product||Annual Premium||Premium Years||Initial Max Monthly Benefit||Inflation Protection||Benefit Duration||Max Monthly Benefit at age 85||Total Pool of Benefits at age 85||Death Benefit|
|Traditional LTCi*||$2,250||Life||$3,500||3%||3 Years||$8,599||$309,562||$0|
|Index Universal Life with LTCi rider**||$2,260||Life||$4,000||0%||4 Years, 2 months||$4,000||$200,000||$200,000|
|Single Premium Whole Life***||$51,256||1||$4,000||0%||LifeTime||$4,000||LifeTime||$100,000|
|10 Pay Premium Whole Life||$7,526||10||$4,000||0%||LifeTime||$4,000||LifeTime||$100,000|
|Premium to age 95 Whole Life||$3,696||to age 95||$4,000||0%||LifeTime||$4,000||LifeTime||$100,000|
*Federal Tax Deduction of Premiums. Depending on State: State Income Deduction or State Tax Credit
**Increasing Death Benefit. Guaranteed Refund of Premium beginning in Year 20. Tax Free withdrawals
***Accepts both Non-Qualified and Qualified (IRA/401k) monies
Interested in learning more or for a free a “Shopper’s Guide to Long Term Care” call us at: for Western North Carolina (828) 513-5045, Upstate (864) 214-7255. Or you may email us at firstname.lastname@example.org
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A fool knows the price of everything and the value of nothing- Oscar Wilde
Laurel Insurance Partners
1854 Hendersonville Road, Suite A18
Asheville, NC 28803
Protecting Assets and Planning your future since 2003