Long-term care insurance is a valuable tool in funding your long-term care plan. Here at Yorkshire Insurance Advisors, LLC, we see the impact on families when a plan is not in place, and even more so if the plan isn’t funded and family needs to step in and provide care or financial support. Long-term care insurance offers the ability to leverage your investment for the most long-term care benefit possible at any time you need it, and should be evaluated along with other funding options to see what works best with your plan.
There are various types of long-term care policies all working a little differently, but the three main types are:
Traditional long-term care
This type of policy is most often a “use it or lose it” type of policy where you make premium payments typically for life, and if you pass away without using any of the long-term care benefits, there is no death benefit or return of premium. The primary benefits of this policy type are: 1) Premiums are spread out over a lifetime and can often benefit the overall financial plan over funding the policy completely early in retirement or even before and 2) Most policies are tax qualified, meaning premiums are eligible for favorable tax treatment. Be sure to consult you tax professional for more details on the tax benefits of this policy type. The primary concern clients have with this policy type is that premiums are not guaranteed. Although since rate stabilization regulation the premiums have been relatively under control for newer policies, there still is the possibility premiums will go up annually.
Hybrid Long-term Care
This policy type is based on a life insurance policy with long-term care benefits. This policy type solved both the premium problem by guaranteeing premium payments and the “use it or lose it” problem by offering a death benefit so you at least get something back for the investment made if not used for long-term care. Many times there are return of premium options too so you can get in the ballpark of 80-100% of your premiums back should you decide to surrender the contract. These have been very popular policies, but do most often required heavy funding early on, which can be challenging on a financial plan.
Annuity with Long-term Care Rider
These contracts are annuities with the ability to increase the distribution amount in the event of needing long-term care. These can a be great option to consider if preservation of capital is also a goal and/or your health doesn’t qualify you for another long-term care option.
Long-term care policies vary from carrier to carrier, and it’s most important that you work with a professional like Yorkshire Insurance Advisors, LLC who will review what your long-term care plan is before making any recommendations on what long-term care insurance options would be best for you. Each policy may pay benefits differently as well once you qualify, with some only pay for professional care whereas others just send you a check monthly to use for whatever care option you prefer…including paying a family member to care for you. If you aren’t asked what your plan is for care, you may end up with a policy that doesn’t even work for you.
We invite you to schedule an initial consultation at 262-366-2702 or e-mail us at .