Financial Q & A

Is there an affordable way to buy long term care insurance?

Long term care (an extended health event, not covered health insurance) is a major cause of poverty for elderly couples.  The healthy (or 'surviving') spouse may spend much of the family retirement savings to pay for the extended care, to be left with little to live on once his/her spouse has passed on.

Industry estimates are that 50% of the population will require long term care at some point in their life – a far higher probability than losing your home to a fire or needing liability auto coverage.  LTC insurance is important but can be expensive.

Many clients dislike making long term care premium payments because they may never need the LTC benefit.  As a result, many life insurance policies now offer the option to use death benefits 'early' to fund long term care costs – if no LTC need arises, the client's estate will receive the full death benefit from the life policy.

Buyers should be careful when considering these policies, however.  If the cash from the death benefit is important to the surviving spouse's continued retirement budget, 'using up' these benefits for LTC expenses may cripple the survivor financially.

A standard LTC policy may be your most efficient option.

We often recommend that couples consider 'shared care' policies in order to save some money on premiums.  If a husband and wife (common law and same sex couples qualify too) each buy three years of LTC coverage on a 'shared' basis, a patient fighting a six-year bout with dementia can 'borrow' three extra years of coverage from his or her spouse.  In this case, the surviving spouse has no remaining coverage, but he or she has protected the family retirement savings, and if he or she needs care in the future, they can spend down those funds without leaving a spouse destitute.

Talk to your favorite Martin Haugh professional about the role of Medicare and Medicaid in long term care decisions, how much coverage you may need, and how your kids and where they live might be a factor in your decision.


Answers to come:

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How can I afford college for my kids?


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