Pay Yourself or Not
One difference among hybrid long-term care products is the way claims are paid. A “reimbursement” plan will NOT typically allow family or unskilled caregivers to provide care. The insurance company either (1) pays for care directly to the care provider or (2) will reimburse after you have paid for care. An “indemnity” claims model empowers you to receive care as you like. This allows you to utilize less-skilled caregivers and family members which may stretch your benefits.
In 2020, 41.8 million American’s provided unpaid care to an adult over the age of 50. That equates to $470 billion in free labor each year! If you are going to be the caregiver, why not pay yourself with an indemnity plan? If you or your spouse/partner qualifies for care under 2 of 6 ADL’s, indemnity benefits allow you to pay your spouse, child, or friend to be your caregiver. If the extent of care becomes too much to handle you can outsource care as you like.
Pay Yourself or Not
High deductible “Umbrella-Like” LTC design
When clients don’t own long-term care insurance, they expose their own assets to the cost of care if they need it someday. A different thought is to allocate a small pile of assets and leverage it to be there for care. If they need care someday, they spend their pile first and then have unlimited benefits pay for care as long as they need it. Think of it as a high deductible long-term care policy, guaranteeing most to more than your money back if you don’t use care.
High Deductible “Umbrella-Like” LTC
Before saying NO, consider a “Legacy or Care” design
Married couples with a modest net worth are exposed to either spouse needing care. If one spouse has an above average need for care or if both spouses end up needing it, they are in more jeopardy of things turning out bad. This product might be something some couples consider before they say no to any long-term care protection.
Statistics say it is unlikely both spouses will need care at the same time. Statistics also say only a small percentage of clients will need care in excess of 5 years. However, statistics don’t matter when you are the statistic. Moderate net-worth clients (in the $1M to $3M range) may want to consider a “Legacy or Care” design.
This product is a second-to-die plan allowing for the surviving spouse to use the death benefit dollar-for-dollar for care. Whatever is not used for care will be paid upon the second spouses death. The death benefit is significantly higher than other products and whatever is not used for care will be left to your heirs. The death benefit may also serve as a permission slip to annuitize assets if guaranteed lifetime income is desired down the road.
Legacy or Care
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