Alternatives to a straight long term care policy
Fixed annuities can provide an income stream for life. Doing so may impact your ability to get Medicaid benefits down the road, should you ever need it so this is definitely something you should talk to an elder law attorney about before proceeding. That said, fixed annuities can be far less expensive than long term care policies and there are other benefits. The cost of a long term care rider may be cheaper than a long term care policy and you can obtain coverage without the health underwriting you must have with a long term care policy. With the annuity you continue to have access to your money (although fees apply) and the funds grow tax deferred. The downside is that the current economy with its drastically reduced interest rate means you’re locking your money up when interest rates are not to your advantage.
Instead of the annuity or the straight long term care insurance you could opt for a life insurance policy with a long term care rider. Some of the products that bundle the two together are fairly expensive (not unlike straight long term care) and paying for your long term care comes out of your death benefit first so you’re just getting back your own money and possibly triggering the long term care policy after your own money is gone.
According to Forbes, two-thirds of 65 year olds will need some sort of long term care services in their lifetime and that care will average to about three years. It makes sense then according to Nancy Anderson, a contributor to the Forbes Personal Finance section, to consider whether or not you’re likely to need skilled nursing care. If, for example your family has a tendency to die in their sleep while living at home, you might consider not paying for long term care insurance. On the other hand, if your family has a history of Alzheimer’s, stroke or other disease that results in needing care for an extended period of time.
Of course if you already have funds enough to pay for care without impacting your lifestyle, then you probably don’t need long term care insurance. But that’s a big if and with the cost of nursing home care rising exponentially each year you’re going to want to crunch some numbers to see if it’s financially feasible to avoid investing in an insurance policy. Consider hiring a financial planner or an elder law attorney to navigate through the pitfalls. Long term care costs can quickly strip a nest egg to nothing. Without proper planning, you may be forced to rely on family to pay for your future care needs.