Riding the Rapids of Long-Term Care Planning: 3 Strategies for Using Combo-Plans to Dodge the Rocks of Rising Rates and Taxes

For many people, the financial future looks about as safe as shooting river rapids in a little kayak. One of the most ominous rocks threatening to dump their retirement boat is long-term care. Over the past month I have highlighted some of the issues surrounding long-term care planning from citing the risks, to the reasons, and the most common products used to help people prepare.   Last week, I was quoted in a Wall Street Journal article focused on the rising costs around the bend of this roiling river of long-term care insurance and how new combo or hybrid life insurance products provide strategies for dealing with this increasingly common problem.

Traditional long-term care policies which fall under what the insurance industry calls indemnity plans, are facing double-digit increases. Just like home insurance, many people struggle with paying steep premiums for something they hope they never have to use and are moving to alternate or hybrid plans. I described these combo plans in detail in my last article, highlighting the benefits provided to their families in the event the long-term care is never needed. These long-term care riders can increase an insurance policy by as much as twenty percent, in some cases, and are limited to the amount of the death benefit but offer a pay-out to your family if unused.

Unfortunately, even these innovative combo-plans will be experiencing increases effective January 2013. In light of the upcoming increases, many families are giving serious consideration to purchasing their plans before the end of the year. Some carriers have indicated that they will be increasing premiums between five and ten percent on all insurance products in 2013 which makes now the best time to sit down with your advisor to discuss whether you can lock in your policy and rates before these policies take a bigger bite of your savings. Not all policies are the same and prices can vary wildly which is why having a good financial advisor is like having a paddle and a guide to steer you safely down the river to a secure retirement.

In spite of the pending increases, these hybrid policies still make good strategic sense for long-term care planning. As I pointed out last week, these plans make a great tax-free bucket from which to draw expenses for long-term care while safeguarding other assets and decreasing stress for your family.  Additionally, rates are guaranteed to stay the same for these combo products unlike traditional long-term care insurance which can see substantial increases over the years.  There is also the tax benefit for your family to consider.  Because any unused benefit goes to your family tax-free and is not counted as part of your estate, it is a wonderful vehicle to provide for them.
 
At Secured Retirement Advisors, we advocate that families need to plan for the best but prepare for the worst.  Sadly, one thing that we often see that families have not prepared for as adequately as they should, is long-term care.  To help you transition to retirement, we're hosting a special event on November 1 at the Doubletree in St. Louis Park.  We're bringing in guest speakers to discuss a lot of different aspects that you may want to be aware of as you make this transition.  This is open for all readers, but most appropriate for those within five years of retiring or recently retired.

To RSVP for this event, simply visit our website and click on the events section.

Our advisors work with our clients to not only maximize profit potential when the stock markets are doing well, but also protect them from potential financial risks like those inherent in long-term care, so that they can continue to spend with confidence in their retirement years. Feel free to visit us at www.securedretirements.com and help yourself to our educational materials.  If you would like a complementary “3 Step Review” of your own retirement plan, call Secured Retirement Advisors at 952-460-3260.