Why Seniors Don' T Buy Long Term Care

In the next few minutes you will learn about a new insurance industry product that provides long term care insurance coverage if you ever need it, but requires no policy, premiums or health qualifications. In my experience, over half the people who shun long term care insurance do so because they feel they will never need it.

Why Seniors Don' t Buy Long Term Care. It is difficult to visualize going to a nursing home. However, there are a number of scenarios where the person may need some kind of assistance but never see the front door of a nursing home. Statistically, half of these people will be right. In fact, most people who need long term care can receive care without ever leaving their home. This can be costly and possibly devastating. When you stop and think about it, the decision not to buy long term care insurance is a decision to self insure.

The average cost of a nursing home today is$ 80, 000 per year and rising. If both the husband and wife need nursing home care, the time to dissipate an estate is cut in half. At that rate, it doesn' t take but a few years to grind through a modest estate. A person can spend 40 years in a career building a retirement nest egg. If they need to go into a nursing home during the last five years of their life, it all could be gone quickly. They spend another 40+ years conservatively managing their money while trying to keep up with inflation. It doesn' t have to be that way as you will soon see.

They may be right. Many people think long term care insurance is too expensive. If a person waits too long to apply, they may have sticker shock. However, long term care comes with a lot of bells and whistles. The rates are based on age. When you strip away some of the options that may be nice to have, the premium is, but not essential a lot lower.

This takes care of the 50% who never will need to go into a nursing home. If a person looks at a plan that covers home health care only, the premium is lower yet. The only thing better is coverage without a premium, which I will get to in a minute. If a person waits to apply for long term care insurance until they are experiencing health problems, any long term care insurance plan may be prohibitively expensive or altogether unavailable. Most people react to a problem only when the problem surfaces. The Solution: The Long Term Care Insurance That is Not a Policy. This very competition engenders new thinking and creative policies.

The insurance industry is very competitive. Enter" Long Term Care Annuities. " There are only a few companies offering this product and the structure differs from company to company. Check with your financial planner for all the options. To give you a general overview of the concept and mechanics, I am going to describe the main aspects of one carrier's contract. The underlying base of an" LTC annuity" is an annuity. Annuities have been around for a hundred years.

Nothing new here. They are safe, the funds accrue at a competitive interest rate, and the account grows tax- deferred. There is no premium. To form an LTC annuity, the insurance company has built in a" long term care option. " It is not a rider. It is simply an option you elect if long term care is ever needed. To qualify, a person only needs to lose two of six ADLs( activities of daily living) . Sweet.

ADLs are insurance companies' method of determining the qualification for levels of care. The person doesn' t have to be in a nursing home. They are eating, dressing, bathing, toileting, transferring( walking) and continence. They simply need to have demonstrated the inability to perform two of the six ADLs to qualify to put the long term care option in their annuity in action. If a male, places, age 60$ 200, 000 into an LTC annuity, assuming a conservative interest rate, the policy would grow to$ 300, 000 in ten years. An Example. If the$ 300, 000 were converted into a life income, the person would receive$ 2, 200 per month for the balance of their life.

Not too bad, considering it is guaranteed no matter what. An 8% return. If this person needs long term care at age 70 by virtue of losing two of six ADLs and elected the long term care option, the life income would jump to$ 4, 500 a month. These new products, long term care annuities, provide the option to receive long term care benefits only if they are needed. Conclusion. There is no separate long term care insurance policy, no premiums and generally little or no underwriting. Those who feel they will never need long term care will simply never exercise their LTC option.

Now there are no excuses. Those who find long term care too expensive have an alternative with no premiums. Moreover, those who have health issues can obtain long term care benefits, as underwriting is simplified or non- existent.