In August 2015, the Federal Long Term Care Insurance Program announced higher rates for new policies. This was alarming for many, and has raised some big questions on how to financially plan for the future: how necessary is setting aside money for long-term care? What exactly are the options for setting up a long-term care fund?
AAFMAA COO, BG Michael Meese (USA, Ret.), addressed the major questions surrounding long-term care in an article for Military1 online. The conclusion is that having a plan for long-term care is crucial, even if those funds never end up being used. Having to unexpectedly pay for long-term care can be financially crippling. For example, the average cost for nursing home care is upwards of $80,000. It's important to familiarize yourself with your planning options now so you can get a plan in motion early.
Meese discusses five ways to fund long-term care: having family members as caregivers, using personal savings and investments, borrowing or financing, using Medicare and Medicaid, buying a long-term care insurance policy, and lastly, buying a life insurance policy that has a long-term care settlement option.
Purchasing an insurance policy that has a long-term care settlement option can buy you options. Premiums may be more expensive than those of traditional life insurance policies, but they are a great option for people who are looking to benefit from money they put aside in the event they won't ever actually need long-term care. When offered from insurance providers, including AAFMAA, these policies allow the policy owner to receive some or all of the policy’s death benefit in advance to pay long-term care costs. While premiums for these policies tend to be higher than comparable long-term care insurance, a significant advantage is that the policies accrue cash value and have a death benefit. Any benefit not consumed by long-term care costs remains in force under the life insurance policy and would be payable to a beneficiary at the time of death. Moreover, according to the Society of Actuaries, most long-term care insurance claims pay for only about one year and three months, which is less than the average length of stay. Note, that as with long-term care insurance policies, these life insurance policies require the policy owner to meet certain criteria before being able to qualify for the long-term care settlement option.
No matter how you decide to address long-term care, the bottom line is that it must be part of your financial plan. For the average person or family, paying for care outright is not an option. Better alternatives include long-term care insurance or life insurance policies with a long-term care settlement options.
If you are interested in learning more about one of our whole life policies, all of which include a long-term care settlement option, call an AAFMAA Membership Coordinator today at 877-398-2263.
For Meese's full article posted on Military1, click here: https://www.military1.com/military-finance/article/948987014-changes-in-long-term-care-what-military-members-need-to-know.