Long-Term Care Insurance (LTCI) is one of the most common advance planning tools. It provides future benefits in the event of a long-term care need and offers flexible policy options to fit your specific situation. Plus, LTCI benefits can be used for at-home care or an assisted living facility, which means you don’t have to go straight to the nursing home if you’re not ready.
Long-Term Care Insurance is available in either Traditional or Hybrid policies and can be issued to individuals up to age 86. The key, however, is that you must meet certain health criteria in order to qualify. Plus, if you are denied an LTCI policy, you may have trouble seeking coverage in the future. That’s why it’s so crucial to work with a long-term care planning professional to determine whether LTCI is right for you.
Traditional LTCI functions like a typical insurance policy where you pay monthly premiums in exchange for future benefits. Since it does not require a large lump sum investment, this type of LTCI is ideal for individual looking for a more affordable option. Traditional LTCI has no cash value, which means it can be used for a healthy spouse whose partner is seeking Medicaid benefits. It also offers state partnership protection, which allows you to protect additional assets if you exhaust your LTCI benefits and seek Medicaid eligibility in the future.
Hybrid LTCI, also known as asset-based LTCI, is a life insurance or annuity contract with long-term care benefits attached. This type of LTCI is typically funded with a lump sum, making it more appropriate for those with a higher net worth. Additionally, the policy value continues to grow over time. Hybrid LTCI often comes with a guaranteed death benefit in the event you pass away before requiring care, which counteracts the old “use it or lose it” mentality and is ideal for individuals who are concerned about losing out on their investment.
Note: Even if this list applies to you, you may not automatically qualify for LTCI. Make sure you discuss your situation with a long-term care planning professional.