One of the greatest threats to any client’s income or accumulation plan is an LTC event. With the cost of care ranging from $54K to $100K annually, a client could be forced to liquidate equities at depreciated values, tap into annuities that were earmarked for lifetime income, or destroy their legacy values. Then there are Capital Gains taxes to worry about if you've sold off personal property to pay for your care.
If you've priced LTC policies, you know they don't come cheap. Most folks don't know that today's Life Insurance Products have Long Term Care riders available to include right in your Interest Earning Life Insurance Policy! How they work, in a nutshell (contact me for further info or a quote), is we add the rider to your Life Policy. The rider specifies a percentage of your policy's Face Amount that would be payable should you be unable to do 2 of the six ADL's (Activities of Daily Living which are: eating, bathing, dressing, toileting, transferring (walking) and continence).
The usual LTC benefit is 4% of the Face Amount per month, so let's say you have a $250K Face Amount policy, 4% per month would give you $10,000.00 per month to use for Long term Care expenses TAX FREE! If you had a $500K Face Amount policy, 4% would give you $20,000. per month for your needs. Right now per the IRS, the "tax free" threshold is $9600.00 mo, so you could consider taking less or just as much as you really need to be comfortable. You would be diminishing the worth of your Life Insurance Policy by taking the money out if you did not put it back in, but in the meantime, you've provided for your Long term Care needs on a tax free basis. After learning a bit about how this works, you may decide to buy more face amount or two different policies, one with the rider and one without.
Don't get me wrong, a good LTC policy is a great thing to have, but once you pay your premium for it, if you don't use it you get nothing back, it's water down the drain so to speak. By having the LTC rider, you are accessing your "death benefit" which is why the benefit is tax free, but you are not risking the loss of all those premium dollars for a stand alone LTC policy.
Again, the best time to buy this is YESTERDAY! The younger you are and the best health you can be in will save you thousands of dollars in premiums in the long run and having the coverage you NEED and knowing your premiums will never go up, regardless of your health or age is priceless.