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Getting Old & Financial Independence is About to Become a Whole Lot Harder

 

A Life Well Planned And Executed

A life well planned and executed is the thing to which we all aspire. Work hard, accumulating assets and retire in comfort. Of knowing everything went according to plan, that is the reality. For the rest of the world, the reality is lurking right around the corner to smack you in the face.
Even those that have done a good job along with their life. Have only done so considering the facts as they were when their plans were in place. As the last election showed the world, the most unexpected things can happen. Despite your plans to the contrary (millions of Hillary fans are feeling that more than most as of late).

Long Term Care And Medicaid Is Life-Changing

Getting old is hard enough. How about the fact the Long Term Care Insurance (LTC) market is about to change…and not for the better? How about the government safety net (Medicaid)? Is it about to do the same? How about that sick feeling you may now have. That your financial puzzle could unravel a lifetime of good planning?
Let’s take these one at a time. The LTC market has recently been aghast. The largest provider of traditional insurance (Genworth Financial) has responded to financial woes. They are selling out to a Chinese real estate company. That is looking to acquire US-based financial assets. This has sent earthquake-like ripples through the industry.

Financial Difficulties

Why? I will attempt to explain. When a major player has financial difficulties. It causes the other players to respond to protect themselves from similar challenges. Causing higher premiums, lower or reduced benefits, and or eliminating the product altogether.
Financial institutions can only handle so much risk. Meaning the number of policyholders that could file a claim. As compared to how much money they have on hand and in reserve. If that gets out of balance, they have to make adjustments. Like the ones mentioned to survive and be able to benefit their customers.

What Can You Do To Protect Yourself

  • First, get or hold on to an LTC policy. I hope the market can withstand/recover without increasing premiums or reduction of benefits.
  • Second, Give up coverage and let Medicaid (government-provided care) take care of you. The three problems with that are. You need to make yourself poor. Either by spending all your money or creating a properly drafted trust. You must use ONLY those facilities that accept Medicaid. And the government usually seeks repayment. From your estate of all monies spent on your behalf after you pass. Pretty rough options. Medicaid is a terrific option only if you have few to no assets. But, keep in mind Medicaid is one of those programs you never know what the government is going to do with. Considering the current status of our national debt.
  • Third, Research a specially crafted “hybrid” LTC policy. These policies offer all the benefits of traditional LTC. But, you control the amount of coverage and the benefit structure cannot change. If you need the benefits, they are in an amount pre-determined by the amount you contributed. Plus what the insurance company provides on top. This comes out to anywhere from 1.5 to 5 times your contribution. As determined by each individual’s age and health status at the time of application.

Two Features Found In These Types Of Contracts

One, if you change your mind, you can get your entire original premium back within 6 – 10 years. Two, whatever amount of the value you do not use. Will pass to your heir’s federal income tax-free upon your death.
The most important thing is to talk to a professional. About which of these choices makes the most sense for your specific situation.
Doing nothing now will guarantee you will compromise your assets. And your ability to make choices later.
According to the U.S. Department of Health & Human Services. 70% of adults age 65 and over will need some form of Long Term Care in their lifetime. Seems like this is likely to be more a story when not if.

About the Author:

Greg Durette is a licensed life insurance broker. He has spent over 33 years working with individuals and businesses. Teaching a better understanding of how to cut the risks of retirement and estates. With the use of different types of life insurance. Annuities, long-term care insurance, and disability insurance products and strategies. He is also the host of the `Wicked Insurance Matters with Greg Durette` radio show. Heard live every Wednesday from 9:30-10:00 am ET on BlogTalkRadio.com.
Greg’s contact info and social media links are on his website. www.FutureSecuredFinancial.com.

 

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