Long Term Care
What is Long Term Care (LTC)?
Long Term Care involves a variety of services designed to meet a person's health or personal care needs during a short or long period of time. These services help people live as independently and safely as possible when they can no longer perform everyday activities on their own.
Most Care Provided at Home
Long Term Care is often provided at home by unpaid family members. Care can also be given in the community, such as an adult day care facility. When care can no longer be provided at home, an Assisted Living Facility may be the best choice.
What Are the Odds? 70% of people turning age 65 can expect to use some form of long term care during their lives. There are a number of factors that affect the possibility that you will need care:
Age - the older you are, the more likely you will need care
Gender - Women outlive men by about five years on average, so they are more likely to live at home alone when they are older
The financial cost of long term Care can be overwhelming for many families. In Metro Atlanta, the average annual cost of Home Health Care is $41,184; Adult Day Care is $15,600; Assisted Living Facilities is $36,720; Nursing Home is $72,051 (private room $80,665). Here's a complete look at LTC Costs.
Can You Afford to Self-Insure? - What would happen to your retirement savings if you or your spouse needed help with Activities of Daily Living? Depending on family is often impossible and/or too physically challenging. Let's say you set aside an emergency fund of $50,000 or $100,000. You may have enough to pay for six months or one year of care. There are various ways to incorporate insurance into your plan of long term care:
Leveraging your emergency fund - Asset Based LTC Insurance is built on a life insurance chassis. As an example, if $100,000 is transferred into this vehicle, you may have a $180,000 death benefit, and a $500,000 LTC benefit, which provides $6,944 monthly for six years, tax free. This type plan can be used for a single person or both spouses. Benefits depend on age(s), amounts of cash available and plan(s) offered by an insurance company . If the insured(s) decide to cancel the plan, the initial deposit is paid back. If the LTC benefit is never used, a tax free death benefit is ultimately paid.
Comprehensive Long Term Care Insurance - This type of coverage has been in existence since the mid 1990's. A plan usually includes: a monthly benefit amount of $4,000 to $8,000, a benefit period of 2 to 6 years, a waiting period of 30 to 90 days, and inflation protection of 2% to 5% annual benefit increase. Indemnity cash payments are often available the first day of care. These plans provide the most comprehensive LTC protection, along with the most choices.
Life Insurance with Chronic Illness Rider - A life insurance policy that pays for Long Term Care expenses. The rider is included in the policy at no additional cost. The maximum monthly Indemnity is 4% of the death benefit. A $150,000 policy can generate $6,000 per month, for up to 25 months. Lower monthly benefits may be taken to extend the benefit period. If the chronic illness benefit is not used , it will ultimately be paid as a tax free death benefit (don't use it, don't lose it).
Life Insurance with Long Term Care Rider - This is a true Long Term Care Indemnity, typically adding 5% to 9% to the cost of the policy. If you don't use the LTC benefit, the tax free death benefit is ultimately paid to the beneficiary (don't use it, don't lose it). NEW! A recent variation uses a last to die death benefit to insure two people for LTC. By insuring a husband and wife, even an older parent and adult child under one policy, a significantly lower cost is realized.
Insurance that pays for Long Term Care is the ideal way to assure that you and your family will not suffer financially. The type of plan that is best suited for any individual or family depends on their financial situation, health and objectives.