Alternatives To Long Term Care Insurance (Plus Tips)

Getting older is inevitable; however, lacking the financial means for long-term care isn’t. Long-term care insurance is an excellent way to ensure you’ll have the proper assistance when you need it. 

But the truth is that: 

There are some great alternatives to long term care insurance and each of those opportunities has its advantages and disadvantages, and no single option is going to work best for everyone. Let’s have a look.

Buy A Hybrid Long-Term Care PolicyUnlike a regular long-term care policy, a hybrid long-term care/life insurance policy can cover you whether you need future long-term care or not.

A hybrid long-term care policy gives you:

Comparable Coverage To Long-Term Care InsuranceThe Ability To Pay In A Lump Sum Or Monthly Death Benefits To Your BeneficiariesGuaranteed BenefitsWhile many people find hybrid policies attractive, they’re not right for everyone.

These plans can be expensive—up to $8,000 per year if you pay monthly or upwards of $150,000 as a lump sum.

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Save Money For Long-Term CareInstead of purchasing a long-term care policy, you can also save money in a designated account. This option puts you in complete control of your funds in a way that no insurance policy can.

Advantages of using savings for long-term care include:

Flexible Contributions And WithdrawsNo Need For Approval Of Funds—You Can Pay For The Care You WantThere’s No Chance You’ll Pay For A Benefit You (Or Your Loved Ones) Never UseCan Grow In Value Via Safe InvestmentsSaving money for long-term care may mean you need to plan earlier than your mid-50s or 60s, as many people do with insurance.

You’ll need to know how much money you have available—and how much you’re willing to spend on your care.

Using savings for long-term care also comes with the inherent risk of running out of funds.

Short-Term Care InsuranceIf you’re not sure how long you’ll need care as you get older, you may want to consider short-term care insurance.

This alternative is exactly what it sounds like, and it may suit your needs if you don’t anticipate needing years of care later in life.

What does short-term care insurance give you?

Coverage For 12 Months Or LessServices And Coverage Options Are The Closest Alternative To LTC InsuranceSet A Coverage Amount From $50 To $300 Per Day For CareGood Choice For People Over 80Pays Along With MedicareThe downsides to short-term care insurance, when compared to long-term, are few.

However, if you anticipate that you will need more than 12 months of care, this may not be the option for you.

Critical Care Or Critical Illness InsuranceCritical Illness insurance works a little differently than long-term care insurance in that it isn’t designed to care for you long-term at all.

Instead, it helps you recover from a severe illness and may cover expenses that long-term care won’t or that you can’t afford on your own.

Let’s look at what critical care insurance gives you as an alternative to long-term care facilities:

Care For Critical Illnesses And Emergencies Like Heart Attack, Stroke, Or CancerCovers Illnesses And Procedures Regular Insurance May NotDaily Living And Transportation, Covered For Terminally Ill PatientsBe wary of low critical illness insurance premiums. They may look attractive, but often low premiums come with high deductibles.

The idea of these plans is to allow you to save for those out of pocket expenses.

Annuities With Long-Term Care RidersIf you choose to use an annuity with a long-term care rider, that means your insurance company will pay you a sum after you retire for you to use as income. If you can afford to put away a large amount of money early on, this type of policy may be right for you.

Annuities with long-term care riders give you:

A Monthly Paid Sum Depending On Your Initial InvestmentCoverage If You Have A Pre-Existing ConditionAccess To Payments Even If You Don’t Need Them For Long-Term CareThese policies can work well for people who aren’t sure whether they’ll need long-term care as they age.

The high initial investment requirement is this alternative’s biggest drawback.

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Deferred Annuities For After RetirementDeferred annuities for after retirement work a little differently than annuities with long-term care riders.

Instead of automatically getting monthly payments from your annuity, you can choose what you do with it.

What does a deferred annuity mean for your long-term plans?

Add Or Withdraw Funds As You See FitDecide How Long You Want To Receive PaymentsAllow Your Account To Grow Until You Need Your FundsUse Your Funds For Significant Expenses, Such As Recovery From An IllnessWith a deferred annuity, keep in mind that you might have to pay taxes on the amount you save. You may also be able to collect death benefits.

Sell Your Life Insurance PolicySelling your life insurance policy for cash value can provide a substantial source of funds to help you pay for your long-term care. 

How can selling your life insurance policy work for you?

Your Payment Will Likely Be Paid Relatively Quickly In A Lump SumDecide How You Want To Invest The Funds After Selling Your PolicyYou’ll No Longer Owe A Premium Each Month, Which Can Free Up More Income.The obvious drawback of this option is the loss of your death benefit for loved ones.

The less obvious issue is that the income you receive will be taxed, and brokers tend to take steep commissions.

Start A Side HustleSince many people purchase long-term care insurance around when they plan to retire, starting a side hustle can provide the funds you need to pay for it. It’s not uncommon to find that you need something more after retirement. You could fulfill this need by starting a small business or getting a part-time job. How can a side hustle help you afford long-term care?

Generate Extra Funds To Set Aside For Care When You Need ItGives You The Option To Start An Account Or Purchase A PolicyFulfilling Side Gig That Allows You To Do Something You LoveA side hustle may not pay for everything you need and may take some times to see a substantial return. However, it’s definitely something to consider; it probably also needs to be an activity you can safely perform in consideration of your health. A side gig can supplement your income and make long-term care more affordable.

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Taking ActionIf you’re looking for alternatives to long-term care insurance, you have plenty of options. Those listed here aren’t the only ones, but they are some of the most common and readily available, especially the critical illness insurance.

You’ll need to consider your health, your predisposition to health conditions, your financial circumstances, and the cost of the care you expect to need or want to figure out what works best for you.

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