Build a Flexible Financial Plan with Asset-based Long-term Care Insurance

You’ve carefully planned for your retirement over the years and are ready to enjoy the fruits of a long career. You’ll have a steady stream of income from your investment portfolio and pension. Your estate plan is in order, and your life insurance coverage is set.

One big risk that could derail your retirement plan is a healthcare issue. A long-term illness or the need for elder care puts everything in jeopardy and might diminish your retirement savings, if you’re not careful.

Long-term care insurance isn’t new, and you may even have a policy already. Affluent families, however, have another option that can leave your plans—and your legacy—intact.

Asset-based long-term care insurance can help you meet any healthcare needs you might face without having to change your financial plan and without sinking money into recurring premiums that you may never see again.

It’s similar to traditional long-term care insurance in that you pay a premium and have a contract for how the funds can be used. The benefits activate when you meet the requirements and need to engage professionals to help with your daily needs.

The key differences are consistency and flexibility.

Asset-based long-term care insurance only requires one premium payment. It’s a significant amount, but afterward you’ll never have to pay into it again. That means you’ll never see a premium increase.

Once the policy is paid for, your contract is locked into place, and you’ll have three options for how the money can be used. And unlike traditional long-term care insurance, two of those options include getting some, or all, of your premium back.

1. Long-term Care Benefits
   This is what you’re buying. You want the peace of mind that you’ll be able to pay for whatever kind of care you might need as you get older.
   
   
2. Death Benefits
   If you pass away before your spouse, they can claim a death benefit from your joint long-term care policy. The amount is determined when you set up the policy based on factors like age, health and the size of your premium. That’s a major advantage over traditional long-term care insurance, which does not include a death benefit.
   
   
3. Return of Premium
   This is another key advantage over traditional long-term care insurance, where your premium disappears if you don’t need the benefits. With asset-based long-term care insurance, you can cancel your contract and request that all or part of your premium be paid out.

Why would you want to cancel and get your premium back?
Insurance is about planning for the future and its “what ifs.” “What if I get sick and need home health care?” “What if I live to be 100 and need assisted living?” “What if my spouse needs nursing home care?”

But once the future becomes the present and you have a clearer understanding of what you need—and how the rest of your retirement plan is performing—you can make different decisions as needed based on the facts at hand. If you decide you don’t need it any longer or believe the premium could be put to better use somewhere else, you can get it back.

That flexibility is what makes asset-based long-term care insurance an attractive option for those who can afford it. It’s still insurance, offering you the security you want when staring into the future, but it also allows you to set aside money and then change your mind if you need to. If you’re ready for the sticker shock of a single, large premium payment, it’s worth a conversation with your financial advisor.

Lance Collins is a financial advisor and area manager based in Pinnacle's office at 300 North Main Street in High Point, NC. He can be reached by phone at 336-881-3346 or by email at Lance.Collins@pnfp.com.