Alternatives for long term care insurance

I have previously written about long term care, noting the first step is to look at your entire financial situation and assess what the impact of a long term care need would be. Once a model for your complete financial situation is set up, it's straight forward to test a variety of long term care scenarios, with and without long term care insurance. Let's be clear here, I see many instances where people are reasonably prepared to address this without insurance. I'll use the abbreviation of LTC for long term care for brevity.

There are three conventional approaches to providing LTC insurance.

• Traditional LTC insurance is focused solely on long term care needs. It's similar to many other insurance products you likely have, such as home insurance. If an event occurs, it provides coverage up to the limits of the policy. If you never have a need, just like your home insurance, it is an expense that we were willing to incur to mitigate the risk of a bad event.
  
• A Life insurance policy with LTC rider serves dual purposes. The life insurance policy provides a death benefit, just as you would expect. The LTC rider, an enhancement to the policy, provides the option to draw down the death benefit for LTC needs. It also expands the amount of money that the insurance company will provide for LTC needs by a multiplying factor, such as 2 or 3 times. (e.g. a $100,000 policy may provide up to $200,000 or $300,000 for LTC expenses)
  
• A Fixed indexed annuity with LTC rider is another example of insurance serving two roles. In this case you would fund a fixed income annuity, which would have a LTC rider as an enhancement to the annuity. This would enable you to draw down the annuity value for LTC needs. This product also commonly includes a multiplier of 2 or 3x the amount funded for the annuity to meet LTC expenses.
  

Separately, I wanted to mention one other alternative that, while not designed to provide LTC coverage, addresses an area that often leads to a need for long term care. This product is commonly termed a Critical Illness policy. Basically, a critical illness policy pays you a benefit when you are diagnosed with a covered critical illness. These are commonly cancer, heart attack, and stroke. In each of these cases, these events often trigger the need for long term care. The point is that this policy provides a cash benefit just when it's likely that we need money for this care. We need to acknowledge that it's only in those circumstances where the illness is covered. Importantly, that usually precludes cognitive impairments such as Alzheimer.

There are many aspects to consider for each of these alternatives, but its not overwhelming. It helps to get advice from someone knowledgeable. Though, I caution you that there are sales reps that have a (self) interest to make the exploration of these options complicated or threatening. I don't. If you have a question, call or email me.