Traditional long-term care (LTC) insurance is a cost efficient way to get the most LTC coverage for the least amount of premiums because it’s stand alone insurance; there’s not an added benefit if you don’t need care.
Not everyone will be able to buy a traditional LTC insurance policy. Here are situations where a traditional LTC insurance policy could be a good fit for you:
- If your primary concern is protection from LTC and you aren’t worried about having residual value (death benefit) left over for your beneficiaries if you don’t need care.
- If you’re price sensitive this is the most cost effective way to get LTC protection because it’s pure insurance. You’re not paying for any added benefits like a death benefit from a life insurance policy. It’s the best bang for your buck!
- You need to be younger than 80 years old. Most traditional LTC insurance companies stop offering coverage after age 79.
- You have to be healthy enough to qualify. If you have many chronic health issues and are on a long list of medications, you may not qualify for this type of LTC coverage. Answering health and medical history questions before putting an application is very important to make sure this is a good option for you. If you want to see if you qualify for traditional LTC insurance and explore your options, click here to fill out health info.
- If you want to share benefits with your spouse. This is a great way to get additional protection without breaking the bank.
- You understand there’s a possibility of your premiums going up in the future since premiums aren’t guaranteed to stay the same throughout the life of the policy. However, policies issued today are priced much more accurately than years ago, so the likelihood of a rate increase is much smaller than it used to be.
- If you’re a business owner, there are potential tax deductions and advantages
- If you have a smaller estate (under $500k), a qualified Partnership traditional policy can provide extra protection from Medicaid spend down rules if you have to later apply for Medicaid LTC benefits.
Let’s take a look at a case study:
Clients: Andy and Lori.
Personal: 55 years old, average health, live and will retire in Ohio, 2 grown kids, previous experience with LTC with 2 of their parents, and they don’t want to be a burden to each other or their kids.
Financial: Combined income of $175,000, investments of $750,000, and a mortgage of $250k.
LTC Insurance Solution: A traditional LTC insurance policy-
YEAR 1 (age 55) –
- Monthly benefit – $5,000 each
- Total LTC benefits – $180,000 each (with the ability to share benefits if one spouse uses all of their own benefits)
Since they are young, we want this policy to grow over time, so we add 3% inflation protection which grows the monthly benefit and total LTC benefits grow by 3% compound every year.
YEAR 20 (age 80) –
Monthly benefit – $10,000+ each
Total LTC benefits – $365,000+ each (with the ability to share benefits if one spouse uses all of their own benefits)
Total Premiums – $6,277/yr (for both spouses)
We found an affordable and meaningful solution for Andy and Lori that will protect their family, finances, and future lifestyle.
The Bottom Line
Traditional LTC insurance is one way to pay for future care. It’s not the right fit for everyone, but it is a cost efficient way to pay for care thereby protecting your family, finances, and lifestyle.