A better way to plan for long-term care expenses

Seven out of 10 Americans over the age of 65 will need some form of long-term care.* If you are very wealthy, you can probably afford the $41,000 per year for home health care or the $90,000 per year for a semi-private room in a nursing home.** Conversely if you are of modest means, you may be able to qualify for Medicaid to pay for your nursing home.

However, if you are merely comfortable and not wealthy, the cost of paying for long-term care could be the one wild card that could derail a financial plan. Some people purchased longterm care policies only to see their premiums get increased. Others avoided obtaining long-term care insurance because they felt like they wouldn’t need it and they didn’t want to pay for something and not get any benefit.

One of the most palatable ways to cover potential long-term care expenses is through hybrid life/long-term care insurance policies. These plans provide a tax-free life insurance benefit that is also available as a longterm care benefit during the insured’s life.

They can even be designed with full liquidity in case the funds are needed for retirement income or any other purpose. As a planner, I especially like tools that solve important problems but also tools that provide maximum flexibility and options.

If you own a liquid hybrid insurance contract, one of three scenarios will materialize: At some point, you will need to access the funds and accumulated interest in the policy to cover living expenses; you will need the additional pool of funds that the policy provides for long-term care expenses; or, if you were fortunate enough to not have needed longterm care, your heirs will get a sizeable income-taxfree death benefit.

Regardless of which category you wind up in you are covered.