3 Ways to Pay for Your Long Term Care

None of us want to think about it, but it is a generally accepted fact that 70% of people over the age of 65 will need long term care at some time in their lives.  According to a Genworth survey, the average annual cost for nursing home care in North Carolina in 2013 was $77,451.  Here are 3 ways that you can pay for Long Term Care needs:

Long Term Care (LTC) Insurance– This product is designed specifically for long term care and can be structured for varying care needs and length of care, including home care. It is fairly inexpensive compared to the cost of long term care.  Having a LTC policy allows you flexibility when making facility choices. Be sure to buy a policy that qualifies for Medicaid Partnership so that if you exhaust your benefits under the LTC policy, Medicaid will adjust their asset spend-down requirement before they begin paying benefits for your care. This will allow you to maintain assets equal to the amount of every dollar of insurance coverage already paid on your behalf.  Often, a joint policy can be written to provide LTC coverage for married spouses for a lower premium than two people separately.  

Indexed Annuities – An advantage to paying for long term care with annuity benefits is that you are utilizing your existing retirement savings which can grow until they are needed.  They can be used for retirement income or death benefits if not needed for LTC.  If you want the option of using the Indexed Annuity for LTC needs, make sure that you purchase an Indexed Annuity that has a LTC rider providing a waiver for surrender charges and that you understand the requirements for invoking the coverage.  Indexed Annuities don’t require medical underwriting which may be an advantage if you have health issues. Some disadvantages are that not every Indexed Annuity offers the LTC rider and that benefits are generally not as broad as they are with a LTC policy and may not cover home health care.  There is also a risk that you will deplete your retirement savings so they are no longer available for other needs.

Indexed Universal Life Insurance – These life insurance policies can be an effective way to build up funds for death benefits, LTC and cash flow during retirement.  Advantages to this approach are that withdrawals may not be taxable and, if your premiums and cash value aren’t needed for LTC, they will be available for other covered needs.  As with Indexed Annuities, the benefits may not be as broad as in a LTC policy so be sure to check the policy provisions or riders before purchasing the policy.

Start thinking about how you want to put aside funds to provide you with piece of mind and options later.   Give us a call if you would like to look at annuity and insurance options which might suit your needs.

Pat Murphy is an experienced insurance professional who has been with Lawyers Insurance since 2005. You can read more about her background on her LinkedIn profile. Contact Pat at 800.662.8843 or pmurphy@lawyersmutualnc.com.