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Alternatives to long term care insurance if premiums become too high.

Life insurance policies with accelerated benefits, Reverse Mortgage, Medicaid.

The cost of caring for seniors is going higher and higher and this is making the insurance companies increase their premiums to stay afloat and be able to pay their policyholders claims.

When premiums go up, many seniors find they are unable to pay of straining to pay and hence need to consider other alternatives to Long term care insurance that are out there.

It is estimated that almost 50% of seniors over 70 years of age will go to a nursing home and the cost of these nursing homes is very high. Often around $100,000 per year.

There are three types of Long Term Care insurance policies. These are:

Facilities only - This covers the expense of the seniors living in a nursing home or other care facility.

Home health care only - This covers the cost of the senior being taken care of in their current home by a care taker who comes to their home to help them with whatever they need to do.

Comprehensive policy - This combines coverage for those who need nursing home care and home health care. This is the most popular policy because most seniors choose to stay at their home with home health care and then go to a nursing home when they are too weak to live in their home.

For the long term insurance policy to kick in, the policy holder must meet two criteria.

They should be Chronically ill and unable to do at least two of the following daily chores they require to live well. These include eating, bathing, dressing, using a toilet, moving from their bed to a chair and being incontinent.

They should require substantial services to protect their health and safety.

So if your premiums become higher than you can afford to pay, there are some alternatives to long term care insurance that you can explore. These include the following:

Life Insurance policy with Accelerated death benefits

This is a life insurance where one can get payment from insurance if they have an insured major lifetime illness. This can be paid to the policy holder if they become chronically ill or terminally ill (death within 2 years of the disease) and they need money for their care.

These annuity based products are complicated and one needs the help of an expert financial planner to navigate them and see what will be covered and what will not.

Reverse Mortgages.

Reverse mortgage is where the homeowner sells their house to the reverse mortgage company but continues to reside in the house and use the money from the sale for their care.

The homeowner must be at least 62 years old and own the home outright with no outstanding mortgages. The homeowners has the right to live in the house for as long as they are alive, but the house may be sold by the reverse mortgage company if they cannot live there and go to a nursing home.

Reverse mortgage may be suitable for older couples, one of whom is healthy and can live in the house, and the other one needs to go to a nursing home. So they can take that equity and pay for the nursing home while the healthier one lives in the home.

Save for Old Age.

A study shows that most people will not need more than $100,000 for expenses in their old age between the time they are too weak to care for themselves and before they die. So if someone is disciplined or has high income, they can actually save this $100,000 over their lifetime and will not need any long term care insurance.

Using Medicaid.

Medicaid covers for nursing home and custodial care expenses. Different States have different eligibility criteria for Medicaid and one needs to check with their State. However, the criteria include Minimum Income test and Minimum Asset Test. This means you must not be making a certain amount of money per month and should not be owning a certain amount of assets to be eligible for Medicaid.

There are other complex rules regarding using Medicaid and one needs to check with a financial planner who is knowledgeable with Medicaid rules in their state.


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