Have you ever looked at your Life Insurance or Annuity statements and wondered if you could be using the gains from these policies more effectively? One option you may have is to transfer some of that money to fund a Long Term Care policy through a 1035 Exchange. Not only would you be purchasing a very valuable tool for protecting your financial future, but you may also be relieving yourself of a hefty tax burden.
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LTC Insurance Blog
Simplifying the process of understanding Long Term Care, and helping you decide if Long Term Care insurance is right for you.
Many people ask, "Should I wait to buy Long-Term Care insurance when I'm older because I don't think I'll need if for a long time. I'll be paying for it all those years that I won't be using it". This is a very good question.
There is so much press right now about the rising cost of Long Term Care Insurance, so it is important to remember the reasons why Long Term Care insurance is needed in the first place. If we just focus on prices rising we'll make a big financial planning mistake.
As Baby-Boomers across the country reach retirement age, the United States Government has realized that implementing federal programs to cover the cost of Long Term Care services is not feasible. The cost would simply be too great. As a result, the federal government has encouraged individuals to take responsibility for their own Long Term Care planning and offered certain tax incentives to help Americans do so. Tax Qualified LTC plans offer some very valuable tax advantages.
One common misconception about Medicare is that it will pay for Long Term Care services. In recent years, the United States Government has begun trying to dispel this myth. The Social Security Administration’s annual statements now include the following warning: “Medicare does not pay for Long Term Care, so you may want to consider options for private insurance.”
In some very specific instances, Medicare will pay a portion of Long Term Care costs. Receiving this benefit can be difficult as there are several conditions that must be met in order to qualify.
It’s a prudent and logical question for upper-middle and high income individuals to consider as they ponder purchasing Long Term Care insurance as part of their retirement plan. Having helped many such individuals plan for their future long term care needs, I’ve come to the conclusion that many, who think they have adequate capacity to pay for extended care giving services out-of-pocket, haven’t done the math as thoroughly as they should.
When counseling clients, some will say, “I think we have enough in our retirement savings to handle any long term care needs that might arise.” They may be right. With a few follow-up questions, I learn that they might have anywhere between $500,000 and several million dollars in retirement savings and investments. By providing additional information, I’m usually able to encourage a more realistic look at how far their retirement nest egg will last should they need extended long term care. Here are the key cost considerations that are often overlooked.