Long-term care expenses, typically just for standard long-term care, are approaching $10,000 per month. If you are facing a bill of $120,000 per year just to live and maintain a reasonable standard of living, then that can be a significant challenge to overcome. And really, what most people are running into is that it will eat into their portfolios and eliminate all of this money that they have spent a lifetime saving. Now you’re paying it to an institution that, granted, is providing a valuable service, but I’m sure that you don’t necessarily want to go ahead and pay a hospital all of your money at the end of your life.
Typically, when you’re looking at long-term care, there are three different versions of long-term care.
The first one is the standard long-term care policy. It is effectively similar to car insurance. So you go ahead and pay for it all the time. If you never end up using it - you don’t retain anything. If you do end up using it, then it’s very valuable to have, and it's always in place.
There’s a second version where you can have life insurance associated with long-term care. This is a nice feature where you have a long-term care policy, but if you never end up using it, then your beneficiaries can still receive the benefit back. So it’s not wasted, and it doesn’t just go away, kind of like car insurance does.
And then finally, there’s asset-backed long-term care, and this is where you put money into a product. Let's say that you put $50,000 into a product, then it would provide you with 2-3 times that value in long-term care benefits, so that it would be $100,000-$150,000 of benefit, and if you never use it, that money just goes back to your beneficiaries as well.
There are a lot of things to consider when you’re trying to decide which long-term care option is best for you. As far as how you want to pay for these things, whether or not a focal point is your estate or your beneficiaries, we’re happy to go ahead and review what all of those options are and help you find the direction that you want to take.