By DEBRA L SEPHTON
Orlando Medical News would love to tackle your retirement and financial planning questions. We encourage you to send those questions to firstname.lastname@example.org with the subject line Healthy Wealth. Questions selected for inclusion in the October edition will receive a complimentary 300 x 600 pixel ad with animated gif on our website.
Q: My Financial Planner said I "have enough money to fund my future long-term healthcare needs," so why should I purchase a policy to help with this cost?
A: I hear this from many of my clients, and when I ask them when they plan on needing money for long-term care, of course they can't answer this. No one knows what our future holds or if we'll ever need skilled or home nursing care, but chances are most will need some level of care in our lifetime. Example; I'm currently working with a client, I'll call him John, was told by his financial planner, ten years ago, that he and his wife would not have to worry about long-term care insurance as he had enough assets to provide care when and if they needed it, but recently this statement has changed since the recession in 2008, stagnant portfolio growth, inflation and increased heathcare costs.
Now that John is at a reflecting point, and navigating their long-term care options, he realizes that if he was previously advised to purchase a type of long-term care insurance to accompany his portfolio, he would have saved and preserved money in the long run. The younger and healthier one is, the lower the premium will be. Planning for you and your spouse's future long-term care needs will bring peace of mind, while securing a portfolio for the future of your family's legacy.
Q: What are the options for paying for the costs of long-term care?
A: There is a definite link between Health and Wealth. Protecting your financial portfolio from erosion due to long-term care costs is of great concern, and finding the proper tools to address this issue is sometimes confusing. Luckily there are several options today which were not available in the past, however, what may be the obvious answer for paying for Long Term Care (LTC) may not always be the best solution for you.
There are several options that assist or cover the costs associated with healthcare and custodial costs as one ages;
Traditional Long-Term Care Insurance (LTCI) is of course the obvious. LTCI provides a daily benefit to pay for care. In the last few years we've seen several insurance carriers depart the long-term care arena and have annually increased premiums to existing client's due to aging populations, raising institutional / custodial costs, and overall longevity.
Hybrid Policies are growing in popularity for several reasons; monies are available for skilled nursing or home care with a daily benefit much like the traditional LTCI. A beneficiary may be
designated to receive a lump sum death benefit when funds are not utilized prior to a client's death. Premiums do not increase since a hybrid is "wrapped" in a life insurance policy with fixed monthly or a single premium. Annuities and IRA's have also been used to fund a hybrid policy. Funds set aside for future healthcare costs have found a new home with hybrid policies to ensure "life time coverage" of their aging healthcare needs with the use of riders within the policy.
Life Insurance Policies have also addressed healthcare, skilled nursing and home care costs by adding attractive "Living Benefit Riders" such as, Critical Care and Terminal Care Riders. These riders allow for access of the death benefit when certain criteria are met, to be advanced while the client is living to assist with healthcare and custodial costs.
This article is not intended to provide legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Atlantic Benefit Consultants, LLC and Debra L Sephton do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney. For more, email deb@AtlanticBenefitConsultants.com