The first way to address
the issue of handling Long Term Care expenses is to purchase a traditional LTCI
(Long Term Care Insurance) policy. There
are certain advantages and disadvantages to this approach. Please keep in mind that I and my company
follow a strict rule in always making recommendations based on your objectives. Full transparency with no hidden agenda.
The first advantage in
such a plan is that you can fully customize your individual plan. In effect you create how long you wish the
benefits should be paid, the waiting period when benefits begin and the amount
of benefits. If a spouse wishes to be
included, there is an annual discount. Furthermore, part of the premium you pay
may be deductible off your income tax.
You do have to meet certain thresholds that are indexed for
inflation. It is my belief that the
income received from a Long Term Care policy is not included as taxable income.
Now there are catches in
these types of plans that you should be aware of. First, the insurance company can increase
your premiums. This is not true of Life
or Disability Insurance and this has happened in the past and there are
indications it could continue in the future.
When I started using Long Term Care policies, there were 10 well-known
and good rated companies. Now many
insurers have dropped out of the market, leaving very little competition and
you as the buyer are hurt. Specifically I have only two good companies I feel comfortable in recommending. Another disadvantage
is that what happens if you never have to use this type of Insurance? All the money invested in this form of
protection is wasted. In addition, the
underwriting for such policies are very stringent and if you are even accepted,
there is a good chance of the policy being rated.
If you have the need and
it’s one of your objectives, then such a plan is worth considering.