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February 1, 2010 Newsletter Archive

Is Long Term Care Insurance For You?

Many of us do not think about our long term care needs until we experience a crisis of our own or that of a loved one. It's often during such a crisis that we recognize the significance of long term care. Contrary to popular belief, Medicare, Medicaid or health insurance will not cover most long term care needs.

If you can afford the premiums now and are insurable, then perhaps you should consider purchasing long term care insurance (LTC). Today's LTC Insurance products are more flexible and provide more options than those of the past. That said, there is much to consider when buying LTC insurance. For instance, adding inflation protection benefits and home care riders will increase premiums. Yet, not considering them may result in buying a product that will be inflexible and not truly helpful when you need it to work for you. If you are going to invest in long term care insurance, invest in a good policy.

Coverage for Nursing Homes and Your own Home

Make sure that you buy coverage for nursing home and alternatives to nursing home care. Some policies cover the costs of home care or assisted living. You can think of such a policy as helping you avoid a nursing home.

Years of Coverage

You may want to think about long term care insurance as just one of several tools in a more complete life care planning arsenal. How many years of coverage you purchase is an individual choice. There is no magic number. However, some experts believe that you may want to purchase five years of coverage. Keeping in mind Medicaid planning, with the five year look back period, once you begin to use your long term care insurance you may want to transfer assets to your children, allowing your long term care insurance and some other income to support you during your five years of coverage, and after that period, applying for Medicaid.

Compare and Share

Compare insurance companies and their rates. Make sure your company is A or A+ rated by A.M. Best or another notable insurance company rater. Compare both rates and offerings before making a decision. It is often best to work with a long term care insurance broker, because different companies have different offerings which makes comparing plans sometimes difficult.

Which Spouse, or Both?

Sometimes a married couple will only be able to afford insurance coverage on one spouse. Based on statistics which tell us that women are more likely to outlive their husbands, wives should get insurance coverage. However, it is important to take into account health history and that of family members - that is more relevant to you than general population statistics.

Is an LTC Premium Deductible?

"Qualified" long term care insurance premiums will be treated as a medical expense and will be tax deductible to the extent that they, along with other unreimbursed medical expenses, exceed 7.5 of the insured's adjusted gross income. The taxpayer's age determines the maximum long term care insurance premium that is deductible, and this is relatively small for most people. Ultimately, there is not truly a tax incentive to purchase long term care insurance, but even where a small deduction is available it is important to take it.

Consult with an Agent

Long term care insurance products have grown in complexity, even as they have improved. Today, many financial advisors as well as insurance agents sell a variety of LTC policies and are well situated to advise you. Ultimately, it is best to consult with a professional who represents a number of insurance carriers so you can choose from a variety of policies.

What Can You Afford?

As a rule, your premium payment should not affect your standard of living. Money that you spend on your premiums should be equivalent to money that you would have otherwise set aside as your savings. Paying for LTC insurance comes down to personal choices we all have to make; do we save our money in investment assets, pay for insurance premium payments, spend money today or save it for a rainy day? Your personal risk analysis and comfort level will be your guide.

For more information on long term care insurance and other life care planning needs please call us at 603.643.6072 or 802.457.9492, or email mark or daphne.

Melendy Moritz PLLC is a client centered boutique firm. We focus on your unique needs by providing the individualized legal counseling and advising tailored to your specific situation.

We concentrate on the planning that matters to you.
Call us at 603.643.6072 or 802.457.9492


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