Is There an Alternative to Long Term Care Insurance?
So many uninsured Americans are wondering if there is an alternative to long term care insurance (LTCI) which provides similar coverage but spares people from the high annual premiums.
First of all, LTCI is defined as an insurance product that aims to provide coverage for one’s long term care (LTC). An insured individual’s coverage will depend on the type of policy that he has purchased and all the components that go inside it.
Even though LTCI policies are considered to be the best protection against the soaring cost of care, majority of the country’s population nearing the age of retirement still refuses to invest in this insurance product as they are discouraged by reports on premium hikes.
Practically everybody is aware of the huge premium increase which one of the leading LTCI carriers had imposed on its existing LTCI policies earlier this year. Scared that they might end up with the same predicament, uninsured Americans are looking for other ways to plan their future health care needs.
According to professionals from the field of long term care (LTC) and senior care, some of the helpful alternatives to LTCI policies would be reverse mortgages, LTC annuities, and one’s retirement money. The latter, however, does not hold much bearing they say since not many people in the country are earning $1,000,000 or more than this amount in a year.
One’s retirement money is only useful if it is used together with an LTCI policy which provides partial coverage. For instance, your policy covers only 50% of your nursing home expenses so if you’ve incurred $300 in expenses your policy will pay $150 while you pay the excess from out-of-pocket.
Now if you don’t have LTCI and you’re going to use your retirement money to pay your LTC expenses, it won’t take a year from the time that you start receiving LTC before you become impoverished. Once you’ve outlived your nest egg begins your financial problems.
Long Term Care Insurance or Reverse Mortgages?
Reverse mortgages are exclusively for seniors aged 62 and older. It is a kind of home loan but the borrower does not have to pay in installments because the instant he dies, his home goes directly to the lender.
This is ideal for senior folks who have no other source of funding for their medical expenses and home modifications among others.
Perhaps, the only downside to reverse mortgages is the fact that when the borrower dies his family won’t receive anything,
LTC annuities are another option. It is similar to an LTCI policy but the difference lies on the underwriting since LTC annuities do not require an individual’s health to be in tiptop shape. Aside from the underwriting, there is also a big difference in the mode of premium payment as LTC annuities require a lump sum payment as opposed to an LTCI policy’s annual or monthly payments.
Lastly, LTC annuities will only foot your LTC expenses up to a certain period of time. If you will require ongoing care after that, you better have a long term care insurance policy because if not, you’ll end up with Medicaid. Get long term care quotes today
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