Long-term care (LTC) insurance is a type of policy that pays for any services you need for help with daily living. This includes everything from home health aides to nursing home care. However, the cost of long-term care has increased significantly in recent years, with the average annual premium more than doubling in the last decade alone. Although LTC coverage is still worth considering as you make your retirement plans, financial advisors also recommend considering alternatives to ensure you’re able to pay for your needs as you age. 

Long-Term Care Options When Pricing Insurance Policies

1. Savings 

Putting money aside to cover your long-term care expenses is one option that can help you avoid paying high insurance premiums. With the advice and guidance of a qualified financial advisor, it’s possible to save a substantial nest egg.

Building up savings helps you avoid paying premiums for coverage that you may not use and allows you to put your money to work for you earning interest. However, if you need full-time nursing care, your savings can be used up quickly, leaving you to turn to public funding for your care and limiting your choices. 

2. Tap Into Your Life Insurance Policy

Some life insurance coverage options allow policyholders to access a portion of the payout before they die in order to pay for long-term care. Known as an accelerated death benefit, this option is typically available on most whole-life insurance policies.

There are typically restrictions on when and why you can use these funds, so you’ll need to review your policy closely to know exactly what can and can’t be accessed. Also, by taking the death benefit early, you’ll reduce the amount that your beneficiaries receive. 

3. Purchase an Annuity

If you don’t qualify for long-term care insurance due to your age or medical status, or if you have a significant amount of money in savings, your financial advisor may recommend an annuity with a long-term care rider to cover your expenses. Although an annuity requires a significant upfront investment (upward of $50,000 in many cases), it guarantees a steady stream of income over the life of the annuity.

By adding the long-term care rider, you can use the money earned on the annuity to pay for your care tax-free. Depending on your situation, the income earned from an annuity may not be enough to cover all of your expenses, and you’ll be tying up cash for several years, but it’s an option that benefits many.

For expert, comprehensive advice and assistance with all of your insurance and financial matters, turn to Seeman Holtz in Boca Raton, FL. Their knowledgeable financial advisors can assist with asset protection, retirement planning, insurance policies, and other services for clients across the country. Call (800) 991-3592 to speak to a representative or visit their website to learn more about their products.