The headlines say it all – as more and more Baby Boomers retire, America is headed for a Long-Term Care (LTC) crisis. According to the U.S. Department of Health and Human Services, seven out of 10 people turning age 65 today will need some type of long-term care in their later years.
Add to this, a Harvard study indicates over 40% of people age 65 and over live alone. Of those who reach their 80th birthday, nearly 60% live by themselves. Considering the skyrocketing premiums for long-term care insurance, an annuity with an LTC rider may provide a solution for those living alone who need in-home care.
The Rising Cost Of Long-Term Care
According to a recent article on CBS.com, the phenomenon of “healthcare inflation” is the result of skilled workers leaving their careers in the wake of the COVID-19 pandemic. As a result, healthcare inflation has driven up the cost of in-home care and long-term care in a facility. In fact, a semi-private room in a nursing home can run as high as $100,000 per year depending on where you live. Keep in mind, since custodial care is considered non-medical, it’s not covered by FEHB or Medicare.
“If you wait too long to purchase an LTC policy from a private insurer, your premiums are even higher or, worse, you may be denied coverage.”
Healthcare Inflation Drives Up The Cost Of LTC Insurance
For many, LTC insurance can provide some peace of mind but healthcare inflation is gradually making the cost too expensive for most retirees. In fact, premiums for the government’s FLTCIP plan have increased to the point that participants have to choose between higher premiums or lower coverage.
If you wait too long to purchase an LTC policy from a private insurer, your premiums are even higher or, worse, you may be denied coverage. Keep in mind that LTC insurance doesn’t provide the growth potential of an annuity and the premiums you’ve paid may be lost forever if you never need LTC.
The Advantages Of An Annuity With A Long-Term Care Rider
If you purchase an annuity with a LTC rider, you don’t have to worry about chronic health conditions because there’s no medical underwriting required. (Note: Some conditions like Parkinson’s disease may not be eligible.) The rider gives you immediate access to your long-term care funds and can be used tax-free to pay for LTC in a nursing home.
Even better – your annuity is a retirement asset that provides growth with a guaranteed stream of lifetime income plus a death benefit for your beneficiaries. If you end up not needing long-term care, your heirs can likely collect the accumulated value of the annuity.
Meet with an FRC® trained advisor to learn more about how lifetime annuities work.
