A few months ago, I attended a long term care continuing education course for licensed insurance agents. The meeting room was packed with concerned advisors who are looking for the best ways to protect their clients from financial catastrophe in retirement due to rising health care costs.
As baby boomers age, long term care becomes an increasingly important conversation to have.
According to Fidelity’s Retiree Health Care Cost Estimate, a 65-year old couple retiring in 2016 will need an estimated $260,000 to cover health care costs in retirement. This is a six percent increase over last year’s estimate of $245,000 and the highest estimate since calculations began in 2002. (Source)
Since women live longer than men (which means we’ll require more financial assets to live), putting long term care coverage in place is a crucial element of a sound retirement plan. In fact, no retirement plan is complete without long term care is a mantra we advisors commonly hear in this industry these days.
Long term care insurance coverage gives you options in your golden years, and helps you maintain a life of dignity that you may not be able to afford otherwise. These days there are many new hybrid products on the market, making it possible to invest in LTC insurance without the threat of wasting those dollars should you not need it in the long run. These new hybrid products are called asset-based long term care insurance or linked-benefits, because they are linked to other insurance products like life insurance or annuities, which allows you to buy long term care coverage for pennies on the dollar.
Last year, I finally got around to putting LTC coverage in place for my husband and me. It’s a joint-life policy that will require ten years of premium payments (and no more) and in exchange each of us will have access to lifetime benefits. What makes the benefits available for a lifetime is the fact that the policy is linked with a whole life insurance policy. It’s a little pricier, but worth the peace of mind knowing that my husband and I will be covered for life no matter how many LTC claims we might have, or even if we are receiving benefits at the same time. I call that sleep-at-night-insurance.
The ideal time to acquire long term care coverage is in your fifties. If you have a family history of medical conditions, you’ll want to inquire about coverage sooner. But it seems most people do not think much about how to cover these costs until they reach their sixties.
Long term care insurance is an underwritten product, so getting coverage before a serious medical condition shows up is key to keeping your premiums low. But even if you wait to get coverage, and you do end up paying higher premiums due to the fact that you’re older, by transferring the risk of possible long term care costs to an insurance company, you’re still coming out ahead because you’re buying coverage for pennies on the dollar.
If you’re at all concerned, drop me a line and we can run some quotes for you. It’s a free service I offer. There’s no cost or obligation to see if you qualify for coverage, what type of coverage you could get and how much coverage would cost.
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