Benefits of Long Term Care Insurance

by John Darer® CLU ChFC MSSC CeFT® RSP CLTC

 

To qualify for public payments for Long Term Care through the Medicaid program, individuals must first impoverish themselves by depleting their assets to pay for care

 

If they do so, they often cannot receive care in the setting of their choice because Medicaid restricts the providers it will cover and (despite recent efforts) still maintains its preference for nursing home settings. Moreover, roughly half of Medicaid expenditures are made by the states, and this is one of the fastest growing items in state budgets.

 

Some revealing long term care statistics from America's Health Insurance Plans (AHIP) :

 

• A 60-year-old would have to put aside $1,666 a month over 22 years to pay for the same amount of services that would otherwise be covered by long-term care insurance with a monthly premium of $188.
• Individuals who are covered by long-term care insurance reduce their out-of-pocket costs by $3,000-$5,000 a month (depending on the service setting) compared to those without coverage.
• Individuals with long-term care insurance receive on average 35 percent more hours of care than those without coverage.
• Most individuals with long-term care insurance said their coverage provided greater access and flexibility with their choice of care setting.

Speaking From Personal Experience about Long Term Care

Long term care insurance purchased when my Dad was 65 helped our family deal with the financial aspects of financing his long term care after he was diagnosed with Alzheimer's 5 years later. When Assisted Living became necessary 12 years later, we had the resources to give my Dad the best possible quality of life at a "much above average" assisted living facility for almost 3 years.    

What If You Have No Long Term Care Insurance, Can't Qualify or Can't Afford It?

There are long term care financing options for people who are on the cusp of needing long term care services, want greater choice of delivery than Medicaid offers,  but have no long term care insurance.  Life insurance can be converted into a source of funding for long term care and increase choices for the delivery of long term care services. For this reason seniors should not surrender their life insurance policies. The proceeds of  a life insurance conversion could run between 30-60% of the face amount of the policy and can be arranged to maximize tax efficiency.  This may be of greater value than a surrender, which could trigger a taxable event.

Watch for my video on Long Term Care Funding with Life Insurance

Another of my video podcasts discusses long term care/ life care funding through life insurance conversions. At present I offer long term care/ life insurance conversions to pay for long term care to residents of the State of Connecticut and hold the requisite licensing.  The service will roll out in other states as licensing is completed and I hope to introduce this service to our New York clients and other New York residents later in the first quarter.

Need More info?

For more information please call me at 203-325-8640 or contact me by email.

Also read The Benefits of Long Term Care Insurance and What They Mean For Long Term Care Financing