How to Cover Long-Term Care Expenses
Does planning for long-term care seem sensible for your retirement?
The answer: Many will not plan for an LTC until it is too late.
Where do you start?
Paying for Long-Term Care in Retirement
Each option has advantages and risks and knowing these will let you determine what your best plan of action is.
From Retirement Assets:
Without any coverage you will pay for LTC out-of-pocket. For most retirees, this is not the best option. If you are married, there is a good chance you and your spouse will both need long-term care. Essentially doubling your cost in LTC, you may consider shared care if you are married to save on costs.
Traditional Long-Term Care Insurance
This option is all-or-nothing. You either use the benefits or you do no end up using it. However, if you do not use the LTC insurance policy, your family/heirs do not typically see a death benefit payout. As a specialized insurance, you pay to have the insurance company cover out-of-pocket costs for long-term care. With the need for long-term care increasing, over the years policy holders have seen increases in premiums.
Life Insurance Policy with Chronic Care Rider
Life insurance can provide an upgrade. As part of your policy, many life insurance companies offer a rider that will help pay for long-term care. In the case you should need long-term care, your life insurance will pay out a fourth of the death benefit from your policy up to four years. Should you not use all the death benefit for your long-term care, your heirs will receive whatever remains after you pass.
These riders can also apply to permanent life insurance policies that will allow a portion of the policy to be invested; a portion that will grow and may be tax-free upon withdrawal.
While used more as a stream of income, deferred-income annuities may be used as monthly payments to offset the cost of long-term care. In some cases, you may be able to purchase a deferred-income annuity with long-term care coverage or a long-term care rider.