Traditional longterm care insurance premiums are lost if the coverage is not used. Of course, this is good and bad. Fortunately, the individual didn’t need longterm care services. Unfortunately, for the heirs, spouse or beneficiaries of the estate, the annual costs of premiums paid, are forfeited to the insurance company.

Recently, there have been substantial improvements to the very real problem of longterm care coverage. In our experience, there are two main reasons people who need coverage don’t buy longterm care insurance — the high premiums and the idea that if the policy isn’t used, all premiums are forfeited. That is, a “use-it or lose-it” mentality that many consumers do not like.

The insurance industry has wrestled with this issue, and has developed a powerful solution. It’s an insurance policy that provides a longterm care benefit that if not needed, can either be used as a death benefit, or the consumer can get a return of premiums paid. They created an asset where typical longterm care premiums were thought of as a liability. Suitable consumers can now put aside a lump sum dollar amount designated to assist with longterm care cost, knowing they have access to, and benefit from, the premium paid.

For example, a healthy 60 year old women who invests a single premium of $50,000 creates a longterm care total benefit of $263,000, with a $3,661 monthly benefit along with an initial death benefit of $127,261 (leveling off to $87,861 in year 26). Should she not need the coverage, and hasn’t withdrawn or taken any loans, she can get her original premium back. Certainly, there are underwriting procedures and suitability discussions but the thought of “use-it or lose-it” to longterm care insurance premiums now has an alternative.

For more information on innovative solutions to longterm care costs, please contact our office at (315) 449-4730.

Conveniently located in Central New York state, Wolfson Financial Services is a financial planning and consulting firm dedicated to helping individuals, families and organizations reach their financial goals. If you have questions about this article or if you would like to become a client of Wolfson Financial Services, please call (315)449-4730.