But many people have not bought long-term protection, even though they medically qualify, because they don't want to pay premiums for a plan they may never use, or they are concerned about future premium increases.
In recent years, insurers have created a number of innovative solutions that may address these concerns
These are essentially life insurance policies that come with a meaningful long-term care insurance benefit. Generally, the long term care coverage is offered as a rider on an existing life insurance policy. If there's a qualifying need for long-term care, then the policy can pay benefits.
Here are some common attributes:
- The long-term insurance is attached as a rider to a cash value life insurance policy.
- Policies are often, not always, single premium.
- If the insured dies without needing the long-term benefit, the heirs collect a tax-free death benefit.
- If there is a need for long-term care, the policy can pay a claim that is much greater than the amount paid in. The cash value and death benefit are reduced accordingly.
Hybrid life / long-term care policies may appeal to people who are afraid of losing all of that premium they pay into a long-term policy if they never file a claim. With the hybrid life insurance/long-term care policy, if the insured doesn't need the insurance, the heirs still get a large, tax-free death benefit. So your money is not wasted, even if you don't have a claim.
Long-term care annuities.
Long-term care annuities may help those who need retirement income more than they need a life insurance policy. These products are designed to pay out a regular and predictable income, with certain guarantees. They also provide the benefit of tax-deferral, as long as funds are held within the annuity.
At the same time, in the event of a qualifying long-term care claim, the long-term care rider on these annuities can potentially payout much more in long-term care benefits than the insured pays in, in premiums - sometimes two or three times more, depending on your age and health when you apply for the rider.
Short-term coverage can help in the "gap".
Most long-term care insurance policies have an elimination period. That is, you have to be on claim for a number of weeks or months before your insurance will pay a claim. Some companies are now issuing "short-term care" insurance that will provide help in the gap, before your long-term care benefits kick in.
Because the short-term care policies will only pay benefits for a few months to a year, they tend to be quite affordable - and may be invaluable in helping cash-strapped families cover the first few months of costs that aren't covered by their primary long-term care policies.
You don't have to be in your 60s.
The sooner you can buy long-term care protection, the better. One health glitch, accident or illness in your 40s or 50s can make it difficult or impossible to qualify for long term care in the future. And premiums are lower when you buy at earlier ages.
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