Turn a Death Benefit into a Living Benefit and Pay for Long-Term Care

The costs of long-term care are increasing every year, according to Genworth Financial , but most families and advisors do not understand what they will be confronting when it is time to start paying for care. Too many people wait until they are in the middle of a crisis situation before they start trying to figure out how the world of long-term care works. Long-term care is a topic people don’t want to discuss and it’s a very expensive proposition. Families can go broke quickly trying to provide for a loved one. Compounding this problem is that many people do not know the difference between Medicare and Medicaid, and what you must do to qualify. They don’t know the differences between home care, assisted living and nursing home care. They don’t know what is and is not covered between public and private pay. And, most likely don’t understand the growing array of long-term care insurance, annuity and life insurance products.

People are warned to plan for the future almost constantly over the course of their adult life. But the reality is too few actually heed the warnings and don’t secure insurance or financial products that can mitigate their future risks. There are solutions to help many people who failed to plan. One of the fastest growing areas of funding long-term care is in the area of “crisis management”. There are “point-of-care” tools available to families that can help pay for the costs of care at the time that it is needed. One tool that is becoming more prevalent is exchanging life insurance policy death benefits into structured vehicles such as Long-Term Care Health Savings Accounts (LTC-HSA) that will pay for the costs of senior retirement living and long term care.

A life insurance policy can still protect your loved ones while you are alive. You bought it to protect them in case you died—but, it’s important to realize the same policy can protect your family from certain tragedies brought on by insufficient financial means and/or the need for long-term care:

  • Avoid becoming a physical or financial burden on your spouse or children
  • Family members can avoid being forced into the role of a caregiver
  • Families don’t have to experience the sudden disruption and stress of having to find accommodations for loved ones
  • Income and assets are not drained to support your family today and in the future
  • There are three critical elements to a responsible retirement plan:

  • Protecting lifestyle by guaranteeing income.
  • Protecting family legacy by guaranteeing wealth transfer.
  • Protecting lifestyle and legacy from the costs of long term care.
  • The costs of long-term care can be staggering and, according to the Genworth long-term care costs survey, a person could easily spend through $100,000 (or much more) over a 12- to 24-month period. But, what if you could use an existing asset such as a no-longer-needed life insurance policy to cover the costs so that your income and legacy are protected—all while ensuring that your health and lifestyle are lived with quality, dignity, and choice? It is being done by people every day.

    Related: Are Your Clients Failing to Plan for the Costs of Long-Term Care?

    Despite the best efforts of legal, insurance and financial advisors to educate people about planning for the inevitable with insurance products and savings; people tend to be too busy trying to keep up with today to worry about tomorrow. The problems this can cause goes far beyond the individual. There is a ripple effect that can engulf family members, employers, tax-payers, care providers, and it can also create significant liabilities for advisors.

    So the tough question must be asked of clients regularly: Are you confident that you have planned and saved enough to live comfortably in your senior years? Are you ready to handle long-term care for you or a loved one? Sadly, for the majority of Americans the answer to these questions is NO!