cost of long term care insurance - Spencer Insurance Agency, Inc

Is Long Term Care Insurance right for you?

 

In less than 10 years, all of the nearly 70 million baby boomers will have reached the age of 65. As this massive generation starts to reach an age where extended care is needed, how will families shoulder the cost. Long-term care insurance (LTCI) can be an integral part of any family’s plan no matter what route they decide to take with their older relatives.

 

LTCI is a policy that will reimburse policyholders a pre-selected amount for services to assist their loved ones with daily living activities. This insurance is essential because it can help lessen the financial burden caused by long term care – whether that means home-based care, a nursing home, an assisted living facility, or any variation of extended care.

 

LTCI is important because while some boomers may have invested wisely and have the disposable income to take care of themselves, there is no guarantee that something disastrous might not happen that would cause that income to dry u, leaving them with no backup plan. Investing in LTCI should be a part of any future planning especially considering that 60% of people over the age of 65 will require some form of long-term service.

 

Not only is LTCI helpful for those receiving the care, but family members can struggle to support their relatives if they choose to pay for long term care services themselves. These cost are expected to increase anywhere between 50-120% over the next 10 years. Talking to your loved ones about their long-term care goals and if they have considered LTCI should be a conversation that should start now even if they will not need long term care in the near future.

 

Contact us at Spencer Insurance Agency to see if LTCI is right for you.  Start the conversation now before you need the care.

Is Long Term Care Insurance right for me?

 

Long Term Care - Be Prepared

October is Long Term Care Insurance Awareness Month.

Traditional long term care (LTC) insurance policies have become less popular as the renewal cost rose each year making them unaffordable in many cases.  When LTC insurance policies were first introduced there was not much data on claims so a lot of assumptions were used.  As time passed companies experienced more claims than expected leading to increased premiums.

Long term care policies changed in recent years using a life insurance policy with a LTC rider.  Today there are many different options when purchasing LTC policies.

But you need to know that Long Term Care is a serious risk to your retirement assets.  You worked all your life and saved for retirement. You were not expecting to see those retirement savings being used up by your long term care needs.  Check out Genworth’s Compare the Cost Report to understand the risk to your retirement assets. In our area a home health aide could cost you $54,912 a year.  A nursing home stay could cost you $124,465 a year. At that rate your retirement assets are vulnerable.

Contact us today to have a discussion to see if LTC insurance is right for you. Go to our website to see our report: “Spencer’s Tips on Long Term Care . . . What is Long Term Care and how do I prepare for it.”

Since the new generation of Long Term Care Insurance policies are based on life insurance the sooner you start a policy the less the cost will be.  LTC insurance needs to be purchased before you need it.  Don’t wait until it is too late and you eat into those retirement assets you built all your life.

Is Long Term Care Insurance right for you?

Long Term Care - Be Prepared

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.

What is the #1 threat to your retirement savings?

 

Even if you are in your thirties or forties you need to pay attention to this article.  Your future retirement assets are at risk too.

You insure your homes yet there is only a 1 in 300 chance of a house fire. You insure your cars and yet there is only a 1 in 30 chance that you will have an auto accident. There is a 4 in 10 chance you will need long term care yet very few people insure their retirement assets to protect those assets from long term care expenses. Yes, long term care expenses are the #1 treat to your retirement assets.

According to “Genworth’s cost of care survey”  for 2017, here are the average annual cost in Pennsylvania:

  • Homemaker services (care in the home) $50,336
  • Adult Day Care $16,120
  • Assisted Living Facility $41,400
  • Semi Private Nursing home room $111,325

What is long term care?  Long term care is help needed to assist with the activities of daily life such as bathing, dressing, eating, using a toilet, continence or transferring from a bed to a chair. You may need this care in the home or in a facility.  How long would your retirement assets last if one or both of you needed long term care?

Here are some solutions:

  • Pay out of pocket. Even if you can afford to do this I can show you a better way
  • Medicare – Medicare only covers skilled care after being in the hospital for 3 days. So if you just need custodial care or are not getting better Medicare will not help you. Even if you do receive Medicare benefits for long term care they only last for 100 days. (20 of those days at $0 copay and 80 of those days with a copay of $167.50.)
  • Medicaid – Many with minimal assets will need to use Medicaid.
  • Private Insurance. Long term care insurance has changed dramatically.

Up to a few years ago if you purchased long term care insurance you received a policy similar to a disability policy and you had a certain monthly benefit for a certain number of years. The problem with these policies were that the price was not fixed and most policies saw many increases in premiums.  In addition, if you never needed to use the policy and passed away your heirs received nothing. Many insurance companies have gotten out of this market.

Did you know that today you can use life insurance benefits to pay for your long term care?  You purchase a permanent life insurance contract that includes a long term care insurance rider. If you qualify for long term care benefits (same qualification as the old policies) you can start taking up to 4% of your life insurance benefit monthly to help you pay for long term care expenses. That means if you have a $250,000 life insurance policy you may be able to take up to $10,000 a month to pay for your long term care. When you use all of the $250,000 death benefit then the policy ends.  Best of all if you never need long term care and pass away then your heirs would receive the $250,000 death benefit.

So why should you care if you are in your thirties or forties?  Since this is life insurance the younger and healthier you are the lower the cost. You can have plans that will be paid up by the time you retire.

As always Spencer Insurance Agency wants you to understand your options. Check out our website for more information about long term care insurance. Contact us today to set up a time to talk about long term care expenses and long term care insurance. Decide for yourself how much of your retirement assets will be protected against long term care expenses.  Spread the word to your friends and family because few people know about this option.

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