Planning for the possibility of being disabled and needing custodial long-term care services isn’t by nature a fun topic of discussion.  However, it is a critically important topic.  Even with the most careful retirement planning, LTC costs can devastate retirement portfolios if you haven’t come up with a strategy for disability in retirement.  Traditional LTC insurance is a very strong option for those who want to protect themselves or a spouse.  However, this product can have inherent flaws that many people can’t seem to get past.

One of the main objections to traditional LTC Insurance is, “If I never need care, I have spent thousands of dollars and gotten no form of return on my money.”  This is absolutely true. Too many people think of traditional LTC as an investment when in actuality it is purely insurance protection.

Another objection to traditional LTC is that premiums are not fixed and there is a high likelihood that premiums will be raised in the future. Even for those who are fine with the fact that the policy may never pay out a benefit, and with the relative certainty that the premium will increase, underwriting (medical records review) has been and will continue to be more difficult to pass. The LTC companies don’t want to subject themselves to undue risk.  What can a person do to get around these issues?

Hybrid Life/LTC Insurance and Annuity/LTC solutions, in my opinion, are great alternatives to traditional LTC Insurance.  I have found some great hybrid options to offer our clients.  We have one product that functions like traditional life insurance but has a chronic illness rider that allows the insured to access the death benefit for LTC needs while living, as long they are deemed chronically ill and needing help with two activities of daily living by a medical professional.  This product is great because it doesn’t require the care to be provided by a professional caregiver.

We work with another company that has a U.S. patent on one of its products.  This product is the only life insurance policy currently offered that allows two people to be insured and have access to LTC benefits within one policy.  This product also allows you to put additional coverage on one or two people up to a lifetime benefit period.  Lifetime benefit periods are just about extinct, and I am very pleased to offer access to this high level of protection.

With both of the of the Life/LTC options referenced above, if you never need care, the death benefit pays out to the listed beneficiaries.  Also the premiums are fixed and guaranteed never to increase.  With one company we can insure two people on one policy, making underwriting less stringent.  If health is a real concern, this company offers an annuity/LTC option as well that has limited underwriting.

The challenges of funding long-term care aren’t going anywhere and it’s going to get worse as providers struggle to keep up with ever increasing demands from the influx of baby boomers.  Everyone, whether they want to or not, should at least educate themselves on the multitude of insurance-based LTC solutions available in today’s marketplace.  There are many more options available to you than just traditional LTC, so don’t just decide it’s too expensive.  Come in for a meeting to learn more about the new exciting hybrid LTC solutions available.

Note:  This post was written for educational purposes only. Please consult a licensed financial professional before making any investment decisions.