When I talk about long-term care planning, I’m not just talking about buying a long-term care insurance (LTCi) policy. In fact, for many people that’s not the best move to make at all. Long-term care planning is about a lot more than just buying a policy. It’s about planning an overall strategy for your non-medical, personal care needs as you age. The strategy should involve plans for finding caretakers, getting help from family members, making adjustments in your home to make life easier and paying for any assistance you need. When it comes to paying for assistance, an LTCi policy may be the right choice. But for some, it should be replaced or supplemented by life insurance and/or an annuity.
Life Insurance for LTC Planning
When you buy a permanent life insurance policy, it accrues cash values that you can access for tax-free loans. When you repay these loans, you’re essentially paying yourself back. If you don’t pay back the loan, the death benefit to your heirs will be reduced. The cash value you borrow from can be used to make changes in your home in order to make life more manageable and independent once you start needing long-term care assistance. You can also use the funds to pay for said assistance.
One of the biggest concerns people have when buying an LTCi policy is whether it’s worth it to pay the premiums for a policy they may never even need to use. For these individuals, a life insurance policy can be a better fit. You can consider a critical illness rider or a hybrid policy, where unused LTC benefits are passed onto your heirs.
Annuities for LTC Planning
Hybrid annuities with LTC coverage can provide specialized benefits for long-term care expenses. If it turns out you don’t need to use those benefits, the premiums paid for them continue to accrue with the annuity and can be redeemed or passed on to heirs.
Annuities are also helpful when they protect your principal and guarantee a lifetime income. With these protections, seniors who need care have an easier time budgeting and know how much income they can count on.
Insurance companies work hard to provide products that are truly useful and affordable to a wide range of people. Between LTCi policies, life insurance policies and annuities, you can create a personalized long-term care plan that fits your budget and fulfills your needs.