Long-Term Care Insurance is typically purchased by those that have been affected by the long-term care experience of a loved one. This policy is a perfect choice for the adult children or healthy spouse of your crisis Medicaid planning clients. They’ve seen firsthand the hardship long-term care can cause and will want to take the necessary steps to prevent the same from happening to them.
The ideal candidate for Long-Term Care Insurance will be someone between 40 and 80 years old and generally be in good health. They are not currently be receiving care in a facility. The proposed insured will also need to have the funds available to purchase the policy. Note the hybrid policy usually requires a single premium payment, however, the traditional policy has more flexible funding options.
The traditional LTCI policy contains zero cash value and can be structured in a variety of ways. Premiums can be paid in a single payment, over 10 years, or over the lifetime of the insured. Daily benefit options range from $50 to $300 and benefit periods begin at two or three years, however additional coverage can be purchased up to the lifetime of the insured. Policies can also be structured with a return of premium and/or cash surrender riders. The issuance of this policy is subject to underwriting.
In some cases, the traditional LTCI policy can be used when planning for Medicaid or VA. If the applicant for government benefits has a healthy spouse at home, they may be able to purchase a policy in order to spend-down excess countable assets. The benefit is two-fold: The ill spouse can gain eligibility for Medicaid or VA and the healthy spouse can protect their own financial future should they, too, require long-term care.
Our hybrid policies consist of a whole life insurance policy or annuity contract that contains long-term care benefits. The policy contains cash value and earns growth on a tax-deferred basis. Policies can be funded with an IRA or existing annuity. Monthly benefits are based on the premium amount invested. The base contract provides benefits for 36 months, though continuation of benefits riders are available.
Our hybrid policy can be funded with an existing annuity via Section 1035 Tax-Free Exchange. Pursuant to the Pension Protection Act of 2006, any benefits taken from the policy for long-term care services can be used tax-free to the owner. This policy allows your client to maximize the earnings on their existing when paying for care at home, in an assisted living facility, or in a nursing home.