For Americans who turn 65 today, there is a 70 percent chance that you will need some form of long-term care at some point in your life.
But three-quarters of Americans do not have long-term insurance, many because they cannot afford it. One of the problems is that the policy is cheapest when you are young, but they are not prioritized until people turn 60 or older. Then both age and health issues make it more difficult to qualify. “You never want it until you need it, but when you need it, you can not have it,” said Greg Hammer, CEO of Hammer Financial Group in Schererville, Indiana.
Without insurance, the cost of caring for a loved one can be enormous. According to long-term care insurance provider Genworth, the cost depends on where you live, but the median cost of a semi-private nursing home is $ 90,156 per year, assistance costs $ 4,000 a month and home health care averages $ 4,385 per month.
However, there are options to fund your long-term care, but some may not be options for everyone. “It’s probably different for each customer,” said David Curry, principal and co-founder of East Paces Group in Atlanta.
Confident. Curry says his client has a high net worth, so they tend to set aside savings separately from their retirement savings for medical expenses. “We’re making it part of your financial plan,” he said.
Reverse mortgage. A reverse mortgage allows older homeowners to take equity from their homes and get a cash settlement or a monthly payment. The loan is repaid when the homeowner dies or no longer lives in the home, usually by the heirs who sell the home.
Life insurance long-term care riders. “If the client ends up in extended care, they can use them, if they do not use the money, it will still be an older asset, says Hammer. “You have to be healthy. As you get older, this is one of the challenges. ”
Annuity with long-term caregiver. You do not have the same medical requirements as life insurance, says Hammer. The benefits usually start in five years. “It may not cover your entire stay (in a facility), but even when these assets are depleted, it still generates survivors’ incomes.”
Asset-based long-term care insurance. You pay a premium payment in advance and basically buy two insurances in one. An insurance company pays long-term care benefits if needed. The other pays a death benefit. If you do not use them, the money is returned, says Hammer. But it can be even harder to qualify for these programs than a traditional long-term care policy. “You sacrifice the return on assets for your money, but it creates an advantage for long-term care.”
Life settlement. You sell your life insurance for cash. Anne Long, vice president at Lighthouse Life, says the company will evaluate a policy based on a combination of your current health status, how the policy works and whether it is issued by a high-rated carrier. The company gives you cash for the policy, and in return it will receive death benefits. “An offer is made, and you accept it or not. It can create a pool of funds that otherwise would not have to pay for long-term care.
“It also reduces the ongoing premium on life insurance policies,” she said. “75 percent of people aged 65 and older cancel life insurance because they can no longer afford it. They just walk away. What if you own a home and leave after 29 years? ”
Rodney A. Brooks writes about pensions and personal finance issues. His column is currently running in US News & World Report. He has written columns on retirement for Washington Post and USA TODAY. He has also written for national geographicalNext Avenue and Black Enterprise journal. He retired as deputy editor-in-chief / Personal Finance and pension columnist for USA today 2015.
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