• Age
• Gender
• Health
• Family history
• Lifestyle

If you're concerned about the risk of long-term care expenses, there are a number of things you can do to prepare. You can:

1.   Buy Long-Term Care Insurance (LTCi)

2.   Asset Based/Leveraged Linked Benefit

3.   Life Based/Chronic Illness Rider

4.   Self-insure

5.   Do Nothing

1. One option is to purchase traditional long-term care insurance. Long-term care insurance can help you pay for the cost of long-term care services, such as nursing home care, assisted living, and home health care.

Here are some of the things to consider when buying long-term care insurance:

• Cost: The cost of long-term care insurance varies depending on a number of factors, including your age, health, and the level of coverage you choose.
• Level of coverage: Long-term care insurance policies can offer a variety of levels of coverage. You'll need to decide how much coverage you need based on your individual needs and budget.
• Waiting period: Some long-term care insurance policies have a waiting period, which is the amount of time you must wait after you purchase the policy before you can start receiving benefits.
• Renewability: Make sure the policy is guaranteed renewable, which means the insurance company cannot cancel your policy as long as you continue to pay the premiums.

Here are some of the factors that can affect the cost of long-term care insurance:

• Your age: The older you are, the more expensive long-term care insurance will be.
• Your health: If you have a chronic health condition, you may have to pay more for long-term care insurance.
• The level of coverage you choose: The more coverage you choose, the more expensive long-term care insurance will be.
• The waiting period: If you choose a policy with a waiting period, you will have to pay for long-term care services out of pocket for a certain amount of time before your policy starts paying benefits.
• The renewability of the policy: If you choose a policy that is not guaranteed renewable, the insurance company may be able to cancel your policy if you become sick or injured.

Long-term care insurance can provide several benefits, including:

• Peace of mind: Knowing that you have a plan in place to pay for long-term care can give you peace of mind. This is especially important as you get older and your risk of needing long-term care increases.
• Financial protection: Long-term care can be expensive, and long-term care insurance can help you protect your assets from being depleted. This can help you ensure that you have enough money to live comfortably in retirement, even if you need long-term care.
• Tax benefits: In some cases, the premiums you pay for long-term care insurance may be tax-deductible.

Some of the potential drawbacks include:

• Cost: Long-term care insurance can be expensive, especially if you purchase it later in life.
• Insurability: If you have a pre-existing condition, you may not be able to purchase long-term care insurance.
• Future Premiums: Premiums are NOT guaranteed with LTCi. Each year the company can raise their rates, if they have bad claims experience or just weren’t as profitable as they wanted to be. We’ve seen increases as much as 60%!!! This is a very real concern for seniors who thought they took care of the LTC issue, only to have it rear its ugly head again at the time when you need it most, as you’re older and likelihood of going on claim goes way up.

2. Instead, you could go the route of asset-based long-term care insurance (LTCI), which is a type of LTCI policy that allows you to       use your assets to pay for long-term care. These policies combine an annuity with an LTC rider. The LTC rider provides benefits that     can be used to pay for long-term care services. Instead of just having whatever your assets are to pay for care, this policy leverages     your assets, so that you have more money to protect you and your family from the financial disaster of a long-term care event.

Here are some of the benefits of asset-based LTCi policies:

• You can use your assets to pay for long-term care.
• You can get tax-advantaged benefits.
• You can get peace of mind knowing that you have a plan in place for long-term care.

Here are some of the drawbacks of asset-based LTCi policies:

• You give up liquidity, use and control of your asset(s).
• Most people don’t have enough assets to pledge/earmark for LTC specifically.

3. Another option is purchasing a life insurance policy with an LTC rider. It’s a type of life insurance policy that provides benefits that can be used to pay for long-term care services. LTC riders are typically attached to permanent life insurance policies, such as whole life or universal life insurance, but there is a company that offers it on their term policies too!

When you purchase a life insurance policy with an LTC rider there are two ways that you pay for this rider. Either you will pay an additional premium. The amount of additional premium will depend on a number of factors, including your age, health, and the level of coverage you choose. Or there will be no upfront premium for the rider, but the total amount of death benefit available for acceleration would be discounted at the time of claim based on the insured’s age and health condition.

There are a number of benefits to purchasing a life insurance policy with an LTC rider. These benefits include:

• Flexibility. The policy is covering multiple risks. How you use it depends on what your life’s circumstances dictate.
• On-going premiums, so no large deposit is needed.
• Peace of mind: Knowing that you have a plan in place for long-term care can give you peace of mind.

However, there are also some drawbacks to purchasing a life insurance policy with an LTC rider. These drawbacks include:

• It’s not the primary purpose of the life insurance policy, it’s a rider.
• You have to qualify medically and mentally for the life insurance AND the rider.

4. Alternatively, if you’re wealthy enough, you can self-insure. This means simply that you have enough liquid assets to cover the cost of care and rather than purchase an insurance product to deal with it you’re just going to pay cash as you need the care.

The ONLY benefit we see to this approach is that you maintain liquidity, use and control of 100% of your assets.

There are several drawbacks though:

• You are disinheriting your family of whatever amount your LTC event costs.
• Healthcare costs are soaring, year-over-year, well outpacing inflation so we have no idea how much it could be! We can’t plan for an infinite number.
• What happens if you run out of money?
• The insurance products provide leverage your single dollars don’t make.

5. The final option is, to do nothing. I don’t know of any other advisor that is actively talking about this as a planning option, yet it’s the one most often chosen by clients. While we do NOT recommend doing nothing as your plan for long-term care costs, it is a plan because you know that there’s an issue and you’ve chosen to do nothing about it.

By doing nothing, you eliminate any choices you may have had in your final healthcare journey. Instead of aging in your home or getting the care from the facility you want, you will most likely be put into the Medicaid system. Medicaid is currently paying for 46% of all LTC expenses. You will only be put onto Medicaid after you’ve depleted any personal savings you’ve accumulated over your lifetime. 51% of LTC expenses are being covered by personal savings, not because people want their money to go to nursing homes, but because they’re forced to.

If you're not sure how to prepare for long-term care expenses, it's a good idea to talk to an experienced advisor, like Aaron. Aaron can help you assess your risk and develop a plan to protect yourself and your loved ones from the financial burden of long-term care.