According to a recent study published by Morningstar, more than six million Americans over the age of 65 require long-term care because of either cognitive challenges or the inability to perform essential tasks of daily living. Industry analysts project that, by 2050, more than 15 million people will be receiving some type of long term care. Furthermore, it is estimated that more than half of U.S. citizens (52.3%) over the age of 65 will need some long-term care in their lifetimes. Given that the median annual cost of assisted living facility is over $43,000, it is essential that you take specific measures to protect your estate, so that your net worth is not dissipated paying for nursing home or assisted living care. One idea to consider, particularly if you have disposable income, is to purchase long term care insurance.
The New Look of Long-Term Care Insurance
Long-term care insurance has been around for about a quarter of a century. Until about a decade ago, it was mostly marketed to America’s middle class. However, many of the insurance companies discovered that they had seriously underpriced the product. About 12-15 years ago, many began petitioning state insurance rate regulators for significant premium increases—some in excess of 100%. They also introduced a new wrinkle—the hybrid long term care policy.
With the hybrid policy, you have coverage for some or all of the costs incurred for long-term care, based on the terms of your policy. However, if you don’t need to use the policy, or if your use of the policy is limited, you may carry over the benefits not used in the form of increased death benefits to your survivors. Many hybrid policies still pay a death benefit, even if all available long-term care benefits are used. They are not cheap, though…you can easily pay hundreds of thousands of dollars in premiums over a ten year period (the typical payoff period required by most insurers). But you can save a substantial amount with the right policy, and can have protection well into your 80s.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. For information about specific insurance needs, contact your insurance agent. You may also visit your state’s insurance department for more information. State insurance underwriting rules may affect available coverage and its costs. Guarantees are base on the claims paying ability of the issuing company. No strategy assures success or protects against loss. Investing involves risk including loss of principal.
Contact The Pinnacle Financial Group
At The Pinnacle Financial Group, we have provided professional risk management advice to individuals and businesses in New York and Connecticut for two decades. We understand the critical role insurance planning plays in your financial future. We will carefully explain your options and the different strategies available to you, so that you can make the right decisions for you and your loved ones.
To schedule a free initial consultation, call our offices at 516-763-9700 or complete the form provided below.