If you’re of a certain age like me, think AARP subscriber, then you’ve no doubt been bombarded by solicitations to purchase long term care insurance, LTCI. It really makes sense given that the chances of needing care at some point are better than 50/50 for most people. Do a little research and you’ll find it costs anywhere from $6K to $10K per month for a stay in an Assisted Living facility or Nursing Home. Given that the average stay in a nursing facility is 3-5 years you could easily deplete several hundred thousand dollars from your retirement savings in a short period of time, over a million if you’re significant other needs care too! So just like the last mailer I got pointed out: “It’s a no-brainer; you can’t afford not to buy LTCI”. But wait, what if I don’t ever need long term care? That $5K per year I’m spending to pay LTCI premiums would sure cover some nice vacations, or new car payments or whatever whim strikes me in retirement. If only there was a way for me hedge my bet and be covered whether I needed long term care or not. Now that would be a real no-brainer!
Not long ago you’re only option was to bite the bullet and buy LTCI and hope the company didn’t raise the rates or leave the market altogether. Fortunately, you now have another good option: Annuities. Consider this scenario, you have set aside funds to provide monthly income to support your retirement needs and you become ill and require assistance to perform the basic activities of daily living. If you had purchased an annuity with not only an income rider, but also a long term care rider you could turn that asset into a long term care policy. With some annuities you’re covered for care at home, in adult day care, assisted living or nursing homes just like a LTCI policy. Some companies will double or even triple the income you’re receiving if your care requires confinement in a long term care facility! Better still, if you never need care you can continue to receive income you can’t outlive.
There’s no doubt that buying LTCI can be a cost effective way to cover your risk of needing long term care but I wanted to let you know there are alternatives. Everyone’s situation is different; factors such as health, financial resources and personal preferences need to be taken into consideration when deciding which approach to take. If you would like to see if using annuity is a good option for your situation, send me an email.
To learn more from this annuity professional, click here (John P. Grimes).
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