Is Long Term Care Insurance right for you? You need to ask that question.
Well tax day, April 15, 2019, is behind us now. Taxes are paid or you received an extension. Taxes are bittersweet. They take money out of our pockets but yet provide much needed services. I don’t have a problem paying my fair share.
But how much is fair? We work every day and try to put money aside in 401K plans or IRAs so we can have a secure retirement. Our retirement assets could well be our largest asset. Do you protect that asset?
The chance of a house fire is 1 in 300 but we would not hesitate to get homeowner’s insurance. The chance of an auto accident is 1 in 30 and it is required in Pennsylvania that we have auto insurance. The chance that you will need long term care is 4 in 10 yet few of us have any insurance to protect our retirement assets from the dangers of expensive long term care.
Genworth’ 2018 cost of care report tells us that the average cost in the Philadelphia area for a home health aide is $54,912 a year. The cost of a semi-private room in a nursing home is $124,465 a year. How long would it take to use up your retirement assets to pay these costs?
Long term care policies have only been around since the 1970s. But they really did not catch on until the 1980s and 90s. There was very little data to help insurance companies set rates for these products so as a result costs have gone up dramatically over the years. Some policies had multiple increases of 15% or more.
In the last few years many new options have been introduced by life insurance companies. These new policies referred to as hybrid policies are life insurance policies that contain long term care riders. These riders allow you to take out a percentage of your life insurance death benefit early to help pay for long term care costs. If set up properly these payments would be tax free. For example if you have a $250,000 life insurance policy, one company’s rider would allow you to take out 4% a month ($10,000) to help pay your long term care costs. When your death benefit is exhausted the policy ends and there would be no life insurance. However, if you never need long term care or die before using all the benefit then the remainder of the life insurance benefits would be paid to your beneficiary.
Many clients we talk to are not aware of these options. Since these policies are life insurance you need to be healthy to get the coverage. Also, the younger you are the less the cost. Contact Spencer Insurance agency to learn your options. Don’t assume these policies are not affordable for you.
Let us help you protect those retirement assets you spent years accumulating.