Protect Your Clients from Long-Term Care Costs

Gina Deveney
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It's never fun to discuss the need for long-term care of an older adult with your clients. The truth is, however, approximately 70 percent of adults over age 80 require long-term care, whether it's at home or in a care facility. This care does not come cheap, and it's important to discuss options with your client as soon as possible to protect both their current and future assets.

Potential Costs of Long-Term Care

As of 2015, the average cost of care at home or at an assisted-living facility averaged between $60,000 to $75,000 annually, while a comprehensive nursing facility can cost between $125,000 and $175,000 per year. With care costs rising at an average of four percent each year, an unexpected event or illness may pose a serious financial threat to your client. It is imperative to purchase a benefit policy as soon as one is financially able.

Policy Features

A long-term care policy provides a set dollar amount per day for expenses, typically between $100 and $500. After a 90- to 100-day waiting period, coverage is available for a minimum of two years and a maximum of six years. Most policies are comprehensive, meaning they cover all types of care, including custodial and skilled care, as well as care in the policyholder's home, a nursing facility or an assisted living home.

Options for Healthy Individuals

Healthy clients between ages 45 and 60 have the most options for purchasing long-term care. These clients can purchase either a traditional stand-alone policy, that covers only long-term care coverage, or a hybrid policy, which combines a life insurance policy with a long-term care rider. As of 2011, your clients are able to use the gains from an annuity to pay for a long-term care policy and avoid tax penalties.

Possible Tax Breaks

Clients who own their own businesses may be able to deduct up to the premium of a long-term care benefit policy, depending on the client's age and the age and corporate structure of their business. Most states provide at least a 20 percent state tax credit for individuals. In addition, long-term care benefits can be paid for on a discriminatory basis, then deducted completely in certain corporate situations.

Advice to Clients

Advise your clients to purchase a long-term care policy before they hit age 60, while costs are low due to both age and good health. The older and sicker they become, the higher the premiums will be. For clients who are wary of possible future premium increases, there are policies available that pay out dividends to offset future increases.

Educate your clients on the importance of having long-term care benefits as well as the advantages of purchasing a comprehensive policy sooner rather than later. Putting a long-term care contract in place now will protect your clients' assets in the future, as well as provide a sense of independence and peace of mind.

Photo courtesy of Vichaya Kiatying-Angsulee at



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