Long-term care is becoming more and more prevalent in our society. A whopping 70% of Americans who reach age 65 are expected to need some form of long-term care. They will need this care on average for about 3 years (longer for women and shorter for men). Medicaid is currently financing about 61% of those services, leaving the middle class to spend down their assets to qualify. There are ways to utilize current assets to offset the future cost of a long-term care need.
One of the most significant reasons why people overlook Long-term care insurance is because they are accustomed to the old traditional product. Traditional products were known as a use it or lose it program, with premiums increasing as people got older. I’ve personally seen this play out with customers that I serve. They have this traditional product and as they get older the premiums increase. It becomes a balance of the tradeoff of not paying the premiums or reducing the potential benefit. We do have clients that have needed to activate their traditional long-term care solutions or else they would have been in a situation with less services available to them.
On the other hand, there are now solutions that aren’t a use it or lost it solution. By leveraging capital, you can check three potential boxes:
- Long-term care need
- Return of premium
- Death benefit
There are also ways to pay in full or pay of a certain period to guarantee the benefit without having to worry about the premiums increasing. This is the most common solution of the day.
We at Covenant Financial Group are seeing an increase in parents going into assisted living or full care facilities. It is important to consider how to best leverage assets to pay for these situations as they arise. The new long-term care solutions help cover expenses while protecting assets.