Long-term Care Insurance Not Affordable?

Have you looked into long-term care insurance but were turned off by high premiums? Perhaps the person who tried to sell you a policy before didn't ask the right questions, or you based the price on what your neighbor or relative pays. You might want to get another opinion. Because with the correct information, it may be possible to get a policy that not only provides good coverage but is affordable as well.

There are a number of ways to potentially reduce the cost of long-term care insurance. One method for couples is to add a "shared-care" rider. For example, instead of a lifetime benefit period for each of you, consider a five-year benefit pool that each of you can share. The savings could be significant.

Protection against the rising cost of long-term care expenses is certainly important, especially when you consider that for over 40 years, health costs have been going up faster than inflation. But this inflation rider can be expensive. So instead of a compound inflation rider, which increases your daily benefit more rapidly, look into raising the initial benefit slightly and buying the simple inflation rider.

And what about Medicaid? True, it is meant for people who have gone through most of their money. But do you really want to spend all funds that you had planned to leave to your family? There could be a way to structure a long-term care insurance plan so that you can eventually qualify for government assistance without having to transfer assets out of your family circle.

One way to cover these costs is to purchase a long-term care policy with a benefit period that covers the Medicaid look-back period for asset transfers (typically 36 months or 60 months for trust transfers). Or you could also consider using the cash payments from an immediate annuity to make the premium payments.

At the end of the look-back period, your long-term care policy's benefits will stop. And in the month after that, you would apply for Medicaid. Assuming the look-back period has expired, you could be eligible for government benefits without depleting the money you gave to your loved ones. However, you should consult an experienced elder care attorney in your state before implementing this concept.

For various reason, you may not want to rely on prices that others pay for their long-term care insurance plans to make a decision. For example, your friends may be older, have health problems, or be in a totally different financial situation than you.

Note: Long-term care insurance is subject to medical underwriting, and benefits will vary based among other things upon your age, health, and premiums. Fees and other expenses apply with the purchase of long-term care insurance, and surrender charges may be applicable on money withdrawn after the policy purchase. Insurance benefits and premiums do vary from company to company. Insurance guarantees are subject to the claims-paying ability of the issuing company.