Are You Guilty of Kicking the LTC Can Down the Road?

Posted on

Aug 15, 2019

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The information is all around us news articles, family, and friends -- yet many of us keep kicking the LongTerm Care planning can down the road. Hope we will never get old, hope we will never need care, and if indeed, we do get old and need care, the hope is someone will solve this problem with free care.
Historically, shifting the Long-Term Care risk has been accomplished with Traditional Long-Term Care policies. These are pure risk policies, paid annually for life or till claim. Cost for these types of policies has risen over the years due to declining interest rates.
Many people have shied away from these types of policies because of rate increase histories and because if they never go on claim, they feel they are losing the money spent over the years on premiums. This trend has resulted in the creation of a wealth transfer product called Asset Based Long- Term Care. The uniqueness of this product helps eliminates the fear of if I dont use it, I lose it. This product is ideal for individuals who understand the need for Long-Term Care planning and are considering self-funding their potential care needs.
The design of these products allows for three main benefits. First, many polices guarantee a refund of the single premium paid in at any time. Second, if you die without needing
care, a step up of the initial premium is paid out as a tax-free death benefit. Third, if you need care, these policies pay out a multiple of the premium as a tax-free benefit to pay for care. The care is provided by a Monthly acceleration of the Death Benefit and some plans pay a multiple of the Death Benefit for needed care. This product may be appropriate for people who are over 60 and are thinking of self-insuring. They can self-insure with leverage of 4, 5, or 6 to one.
If you have been guilty of kicking that Long- Term Care Can down the road, now is a great time to look at your options with an Asset Based Long Term Care policy. Growing older is mandatory but doing it well is optional. Having a plan for Long-Term Care is part of doing it well. What is your plan?
Editors Note: This article was written by Tim Ripp, EVP, and Associates of Clifton Park and provided by Bridget M. Sullivan, a Financial Advisor offering Securities and investment products and services offered through Waddell & Reed, Inc. (WRI), member FINRA/SIPC. Insurance products are offered through insurance companies with which Waddell & Reed has sales arrangements. The article is meant for educational purposes only. It should not be considered investment advice, nor does it constitute a recommendation to take a particular course of action. Please consult with a financial professional regarding your personal situation prior to making any financial related decisions. Waddell & Reed is not affiliated with Timothy Ripp or Associates of Clifton Park.

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