insurance

What's new with long-term care insurance?

Options if you're denied LTC insurance

While today's more flexible LTC coverage is a welcome change, especially for the vast majority of baby boomers who hope to age in place rather than in a nursing home, what can those who've been denied coverage for a pre-existing health condition do to pay part or all of those future costs?

Here are four solutions:

Life insurance with an LTC rider

This option mentioned earlier allows you to draw on your life insurance benefit for long-term care in your home or an institution.

The upside: The health underwriting on life insurance is far less stringent than on traditional long-term care insurance. Plus, if you don't need long-term care, you won't lose your investment.

The downside: It will likely be more expensive. "If your LTC policy was going to be $6,000 a year per couple, you might face $12,000 a year in ongoing premiums for the life insurance," says Kisner. "Plus, you could exhaust your benefits over time."

Get a life insurance quote today.

Annuity with home health or nursing home riders

"You purchase a deferred annuity," Kisner explains. "When you turn on the income stream six or eight years later, if you had put in $100,000, you can take out $7,900 a year for the rest of your life. The rider will double that amount if you need home health or nursing home care."

The upside: There's no medical underwriting, and you can't outlive the income stream.

The downside: Investing that much cash upfront takes guts.

Reverse mortgage

Senior homeowners may be able to tap the equity in their home for long-term care expenses.

The upside: There's no physical or premiums.

The downside: The homeowners or their heirs will have to pay the loan back with interest at the end of the loan term or forfeit their home to the lender.

Self-insure

The old saw on long-term care insurance is: Those who need it can't afford it, and those who can afford it don't need it. The wealthy typically self-insure, meaning they fund long-term care out of their savings, while those of modest means spend down their savings to qualify for Medicaid.

"It's really the people in the middle -- (with net worth) between $200,000 and $1.5 million -- who need long-term care insurance the most," Kisner says.

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