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LTC Options That Protect Your Financial Future

As more and more insurers bow out of the long-term care industry and rumors of premium hikes come to fruition, many consumers are becoming skeptical of the products.  But the undeniable fact that most people need such coverage is keeping the ball rolling.  According to a Genworth survey completed last year, the average annual cost of a private nursing home room runs about $77,000.  And that rate increases approximately 5% a year.  Home health care can cost even more, leaving many Americans feeling vulnerable and wanting to secure funds for this stage of life.  Kiplinger Magazine has published an article to address this very real concern.  Kimberly Lankford’s, “New Ways to Pay for Long-Term Care,” discusses three options, other than standalone LTC insurance, to help protect your retirement savings from the potential of astronomical care costs.

Many companies have recently introduced new products that combine life insurance and long-term-care.  Typically, the consumer would either pay a lump sum or pay premiums for a limited time, which guarantees either long-term-care payouts or a death benefit.  This option is most appropriate for consumers who still need life insurance but also want LTC protection.  Another choice is a combination annuity/long-term-care policy, which few companies are offering.  These policies allow you to leverage your investments 3-to-1, allowing for tax-free distributions if funds are used for long-term-care.  This option can be very attractive to people who already own a deferred annuity and can exchange it tax-free for a combination policy.  Longevity insurance is the final option, which is a type of annuity that pays out once a certain age is met, typically 85.  This is a safe way to ensure that you don’t outlive your savings and can provide extra funds late in life when long-term-care costs can begin to add up.  Anyone can purchase this type of annuity, regardless of health, making it especially attractive to those who do not qualify for stand-alone long-term-care insurance.

Costs for long-term-care are not expected to decrease, leaving most people with the problem of how to pay for the costly services.  Instead of taking the risk of leaving this burden to fall on loved ones, many consumers are exploring their options for protecting their savings.  Insurers are developing new products regularly to meet the individual needs of the many Americans  faced with this inevitable challenge.

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