A: As people live longer, planning for extended retirement years becomes more important. Nearly 70% of adults over 65 will need some form of long-term care, and traditional health insurance or Medicare often doesn’t cover services like in-home care, assisted living, or nursing homes. 1 Asset-based long-term care insurance offers a flexible solution by combining life insurance or annuity structures with long-term care benefits. If care is needed, the policy provides tax-efficient funding for those expenses. If not, a tax-free death benefit is paid to your beneficiaries. These policies also build cash value, offering access to funds if your plans change.
Unlike traditional policies, asset-based options offer multiple payment structures, such as single premiums or payments over time, and typically provide four to six years of care coverage. With the rising cost of care, this type of insurance helps protect your retirement savings and reduce the financial burden on your family. It also helps avoid the risk of outliving your resources while maintaining control and flexibility. For those looking to safeguard their income and legacy, asset-based long-term care is a valuable addition to a comprehensive retirement plan.
1 longtermcare.gov, “How Much Care Will You Need?,” February 2020; acl.gov/ltc/basic-needs/how-much-care-will-you-need
Guarantees are based on the claims paying ability of the issuing company. long-term care insurance or asset-based long-term care insurance products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 ½, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income. These policies have exclusions and/or limitations. The cost and availability of long-term care insurance depend on factors such as age, health, and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of long-term care insurance.