Long Term Care Insurance (LTCI) is generally thought of as coverage for those with assets to protect. If you don’t have any assets then you will most likely qualify for Medicaid thus not need LTCI anyhow. LTCI though is not only for the wealthy it is for middle class folks as well. There may however be some different options in terms of LTCI for the wealthy that are not exclusive to them but also are at a cost point most middle class folks may see them as outside their budget, but not necessarily.
There are three basic kinds of LTCI people can buy. The most widespread is a general LTCI policy in which you are buying just LTCI coverage. Also, there are life insurance and annuity based products designed around providing LTCI coverage. These alternative products are designed to help with two different needs and are structured such that if the need for LTCI services comes up then provisions in either the annuity or life insurance policy kick in to offer LTCI coverage. These benefits will usually eat away at the annuity value or death benefit from the life insurance.
Why do these specialized policies exist? For those who want to have LTCI coverage, don’t want to pay for return of premium, and have sufficient funds to put money away in an annuity or one of the permanent life insurance policies these policies exist to meet those special needs. In either case the cash involved in providing for adequate LTCI coverage is far greater than that needed for a standard LTCI policy (See our LTCI overview blog post for more on standard LTCI) but are sitting there ready to pay out as an annuity or life insurance death benefit. For many wealthy folks this seems like a way to hedge against the need for costly LTCI while preserving more of their assets to pass along to designated beneficiaries.
As mentioned before you can get a LTCI policy that has with it a provision for return of premium. In these cases, if you don’t use any (or some cases all) of the premium dollars as benefits for LTCI needs the premiums will come back to a designated beneficiary as a cash payment. The cost of this rider on a LTCI policy is quite high though, and it would not take too much benefit payout before there would be no return of premium made. Thus this is an expensive option to get back paid in premiums.
The life insurance and annuity plans guarantee a specific benefit will be paid. The benefit is usually paid less any expenses paid out for Long Term Care services. So, you know ahead of time what total benefits payouts should end up being. The key with these plans is these alternative plans typically require a significant premium up front or a higher monthly (or other mode) premium than a traditional LTCI. It is a trade-off between the three kinds of plans.
We are here to provide professional guidance in picking the appropriate insurance in Texas to meet these needs. Give us a call to help ensure you are adequate protection to protect your assets.
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