For Americans turning 65 today, there is a 70 percent chance that they will need some form of long-term care at some point in their life.
But three-quarters of Americans don’t have long-term care insurance, many because they can’t afford it. One of the problems is that guidelines are cheapest when they are young, but they don’t get priority until people turn 60 or older. Until then, both age and health problems make qualification difficult. “You never want it until you need it, but when you need it, you can’t get it,” said Greg Hammer, president of Hammer Financial Group in Schererville, Indiana.
Without insurance, the cost of caring for a loved one can be enormous. According to Genworth, a long-term care insurance provider, the cost depends on where you live. The average cost of a semi-private nursing home room nationwide is $ 90,1
However, there are alternatives to funding your long-term care, although some may not be suitable for everyone. “It’s likely different for each customer,” says David Curry, principal & co-founder of East Paces Group in Atlanta.
Self-insurance. Curry says his clients have high net worth, which is why they tend to set savings aside from their retirement savings for medical expenses. “We’re making it part of your budget,” he said.
Reverse mortgage. With a reverse mortgage, senior homeowners can take equity out of their homes and receive a cash settlement or monthly payment. The loan is paid back when the homeowner dies or no longer lives in the house, usually by the heirs who sell the house.
Life insurance long-term carer. “If the customer is looked after longer, he can use it. If he doesn’t use money, it still becomes an old good, ”said Hammer. “You have to be healthy. As you get older, that’s one of the challenges. “
Annuity with long-term carer. They don’t have the same medical requirements as life insurance, says Hammer. The benefits usually begin in five years. “It may not cover your entire stay (in an institution), but even when those assets are depleted, it still creates survivor income.”
Asset-based long-term care insurance. You pay a flat-rate premium payment in advance and basically buy two policies in one. A policy pays long-term care benefits when needed. The other pays a death benefit. If you don’t use it, the money will be returned, says Hammer. However, it can be even more difficult to qualify for these programs than a traditional long-term care policy. “You’re sacrificing the return on investment for your money, but it creates a long-term care benefit.”
Life reckoning. You sell your life insurance for cash. Anne Long, vice president of Lighthouse Life, says the company will evaluate a policy based on a combination of your current health, the performance of the policy, and whether it is issued by a high-rated carrier. The company gives you cash for the policy in exchange for the death benefit. “An offer is made and you either accept it or not. A pool of funds could arise that a senior would not otherwise have to pay for long-term care.
“It also lowers the running premium on life insurance,” she said. “75 percent of senior citizens aged 65 and over cancel life insurance because they can no longer afford it. They just walk away. Imagine owning a home and leaving after 29 years. “
Rodney A. Brooks writes on retirement and personal finance issues. His column is currently running in US News & World Report. He has written columns on retirement for The Washington Post and the US TODAY. He also wrote for National Geographic, Next Avenue and Black company Magazine. He stepped up as deputy editor-in-chief / personal finance and retired columnist for USA TODAY in 2015.
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