Consider Long-Term Care Insurance and Alternatives

Hook Law Center (formerly Oast & Hook)

Virginia Beach, VA (Law Firm Newswire) January 4, 2016 – The latest survey conducted by Genworth reveals that among individuals without long-term care insurance coverage and have no plans to purchase such coverage within the next five years, only 15 percent have a backup plan. There are choices for financing long-term care for many Americans prepared to make compromises.

“In planning for long-term care, one must become aware of the various options available in order to select a policy that provides the desired amount of care and is not cost-prohibitive,” said Andrew H. Hook, a Virginia elder law attorney with Hook Law Center, with offices in Virginia Beach and northern Suffolk.
One such option is an annuity, which offers an income stream for the duration of one’s lifetime with a minimum amount of risk.

However, annuities have come under scrutiny due to deceptive sales practices. Nevertheless, annuities can be used in conjunction with attached long-term care riders for some individuals who would be unable to obtain insurance under a conventional plan because of their present or prior medical conditions, according to Brian Gordon, president of MAGA, a national long-term care brokerage firm located in Chicago. Some insurers, including Lincoln, Mass Mutual and Guardian, provide hybrid life insurance plans with attached long-term care riders.

The advantage of hybrid long-term care insurance policies is the ability to hedge several risks using the same dollar, according to Yan J. Katz, insurance specialist with the Bulfinch Group. If the policyholder has no need for the long-term care rider, the premiums paid may be recovered, and transferred to one’s heir via the death benefit instead of being lost.

While single-premium whole life insurance policies with attached long-term care rider choices only necessitate that a deposit is paid once instead of through continuous contributions, the disadvantage of such plans is the high cost. Hybrid long-term care policies are far from ideal because several of these plans with riders attached place the maximum figure to be applied to long-term care benefits at half of the policy’s face value. Mike Piershale, president of the Piershale Financial Group, said that if one has a death benefit of $100,000, one could be restricted to $50,000 for nursing home care, thereby leaving one with a severe deficit in the event one has to remain in a nursing home for a long period of time.