What alternatives to Long Term Care Insurance are there besides self-insuring?

Both me and my spouse have chronic health issues (hepatitis C and lupus) that would cause LTC insurance to be unaffordable. We are in our mid to late 50's and I would like to at least partially retire in about 4 years. I have a pension, 401K, IRAs, with a total current net worth over $600K.

401(k), IRAs, Long-Term Care Insurance
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August 2016

Your options will be severely limited since both of you have chronic illnesses. If just one of your had an illness, we could try and plan around it, heavily insure the healthier spouse.

If you are able to get coverage, look into Hybrid Life Insurance with Long Term care benefits (either a rider, or living benefit)

So called Hybrid Polices have been growing in popularity over the past few years. They often package Long Term Care coverage with Life Insurance or sometimes even annuities. I think shoppers are attracted to these policies because they often increase the odds of actually seeing benefits. With LTC, generally it’s use it or lose it. Personally, I’d rather not use it, but I still want a great value from my policy.

If you look at a life insurance policy with living benefits like a LTC rider and the death benefit, the question is whether we get Long Term Care coverage first. They may even include a cash value account which can grow tax free and come out tax free when handled properly. The upside is that life insurance has more protection from premium increases; the downside is you may end up with some extra fees to cover the life insurance cost.

If you aren't eligible for life insurance, then I would look into other options with Annuities that come with some type of additional Long Term Care coverage, that you don't have to go through medical underwriting to obtain.

For more tips to pay less for Long Term Care coverage click here:

Best of Luck,

David Rae, CFP

May 2016
May 2016