As you get older, your insurance needs change. You might start thinking about the future of your health care and wonder whether a long-term-care policy is the right choice for you.
The good things about long-term-care policies include protection from the costs of assisted living facilities, but these policies have drawbacks. Any of the following alternatives might serve you better.
An Immediate Annuity
The rules governing Medicaid and payment for nursing homes are complicated, and you should not make a decision without consulting a lawyer with experience in elder care. You also may want to talk to a financial adviser about an immediate annuity.
An immediate annuity basically turns a lump sum of cash into a stream of future monthly payments. You can think of the purchase as creating your own pension. Because the rules for income are different from those for assets, this annuity can protect against the costs of long-term care.
A Longevity Annuity
Specific insurance policies are designed to ensure you do not outlive your investments, and those longevity protections can be used in place of or in addition to long-term-care insurance. A longevity annuity does not start paying out until you reach a specific age, like 80 or 85, after which you have guaranteed income for the rest of your life.
Depending on your location and your care needs, that income might be exempt from calculation regarding assisted-living care. Again, it’s important to get expert legal and financial planning advice.
Smart Estate Planning
Careful estate planning can greatly reduce the need for long-term-care insurance. Depending on your asset base and family circumstances, smart estate planning could eliminate the need for such insurance.
There are ways to shield significant assets, and smart estate planning could protect the inheritance of your children and grandchildren. Consult a qualified elder care attorney.
Long-term-care insurance has its place, and sometimes such policies are the proper choice. But they are expensive, and it’s worth considering all the alternatives before deciding.
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