Caring for our aging population creates unique challenges for families, many of whom will be tasked with serving as caregivers for the long term. Providing care for an elderly or a disabled family member can be a life-changing experience that impacts both the individual in need and the caregiver(s) on an emotional, physical, and financial level.

Genworth has done extensive research on long-term care costs. Their recent research shows that, in Sioux City, the median monthly cost is $5,005 for at-home health aide, $3,750 for assisted living, and $6,509 for a semi-private nursing home room. For clients with investible assets over $2 million, self-pay or repurposing existing life insurance may be appropriate. However, for those who aren’t able to explore those options, long-term care insurance may be right for you.

What type of long-term care insurance is right for you? Consider these three main types of coverage:

  

Traditional Long-Term Care Insurance

You custom-select your benefits to suit your needs. As long as you pay your premiums, you will have coverage (up to your selected limits). However, similar to auto insurance, if you do not make a claim, you do not receive any benefits.
 
When most people think of long-term care insurance, they imagine a policy that pays a specified daily benefit for a set period of time once care is needed and after a deductible is met. A policy is purchased, premiums are paid, and the policy holder has the comfort of knowing they have coverage if needed. For many, however, this represents a “use it or lose it” proposition. If care is never needed after premiums have been paid, sometimes for many years, the policy holder will have nothing to show for it. Additionally, it is likely these premiums will increase over the years as the frequency and cost of administering care increases. Sometimes, premiums can become unaffordable before care is needed, causing policies to lapse.

Hybrid Life/Long-Term Care Insurance

If you are concerned about “losing” your premium dollars if you never require long-term care, a hybrid policy is a permanent life insurance policy with a rider that provides for long-term care. If long-term care is not needed, a death benefit is paid to your beneficiaries, or you can surrender the policy for a majority or full “return of premium” option, in which you would receive the majority of or your entire original premiums back (subject to possible tax implications and carrier availability). 

This is simply a life insurance policy that accelerates the death benefit in the case of medically diagnosed chronic illness or long-term care situations.

Caring for sick or disabled loved ones can be tremendously rewarding, but it can also be financially challenging, potentially derailing your retirement and estate plans. It is important to have a conversation with your spouse and other family members about your potential long-term care needs and how you plan to pay for those needs. Give us a call if you would like us to review your financial plan and address your unique long-term care needs.

Contact Kim and Korey today to develop a plan that’s appropriate for you and your family’s future at (712) 252-6931 or KWMG@stifel.com.