Long Term Care is a Woman’s Issue – Part 1

Long Term Care is a Woman’s Issue – Part 1

November is Long Term Care Awareness Month

Each year I’m required to do continuing education for my long term care insurance license. Usually, the classroom is packed with concerned advisors looking for the best ways to protect their clients from financial catastrophe in retirement because of rising health care costs.

As baby boomers age, long term care becomes an increasingly important conversation, especially for women.

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 our retirement nest egg needs to go farther), putting long term care coverage in place is a crucial element of a sound retirement plan. I always tell my clients, “No retirement plan is complete without long term care.”

Long term care insurance coverage gives you options in your golden years and helps you maintain a life of dignity that you may not afford otherwise.

While most people I talk to are concerned about how to pay for future long term care costs, the number cited reason for not purchasing coverage is the possibility of losing all those dollars paid toward premium if you never submit a claim. This is the downside of purchasing “traditional” long term care coverage.

However, these days there are many new hybrid products on the market, making it possible to invest in LTC insurance without the possibility 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 gain access to long term care benefits via policy.

In this way, if you never need long term care, then you still have the cash value of your policy, from which you can take distributions (or policy loans if it’s a life insurance policy). The remaining account value goes to your designated beneficiaries upon your death.

Since life insurance is an underwritten product, Getting coverage before any serious medical condition shows up is key to keeping your premiums lower. The ideal time to acquire long term care coverage seems to be in your fifties. If you have a family history of medical conditions, you’ll want to inquire about coverage sooner. With annuities, there is no underwriting.

The bottom line is that since healthcare costs are an expense that baby boomers worry about, creating a plan to pay for long term care will ease those concerns and give you financial peace of mind, especially if you’re a woman.

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