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Long-term care insurance alternatives

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For about 280,000 federal employees who are enrolled in the Federal Long Term Care Insurance Program, Nov. 1 is going to hit hard. That's when these employees will see their premiums increase more than $100 a month on average or about 83 percent.

If you're one of these employees, which in total accounts for only about 10 percent of federal employees, you're probably a bit upset at the news. However, there are a few options available through the program. First, you can keep the policy you currently have and pay the new premium amount. Second, you can reduce the benefits you have by half, which will result in an increase in premiums of about 40 percent. Third, you can reduce your benefits to the point where your premium would stay the same. If you don't like these options, there are a few more available.

A life insurance policy can help pay for your long-term care, as once you need the services of long-term care, you will more than likely be approaching the end of your life. The insurance company will let you have access to all or part of the amount of the policy's death benefits. If you die after using half of that benefit, then your heirs will get the other half (tax-free, too). If you don't use any of it, then your heirs will get the full amount.

You can use an income rider in a fixed index annuity. A fixed index annuity is used to ensure you have a guaranteed stream of income throughout the remainder of your life. The idea here is to let that income sit and gain interest credits. There will also be an income rider available to you for an additional cost. That rider can increase the base benefit by a certain amount each year. The longer you wait to access the rider income, the longer you will be able to enjoy the annual roll up interest. In 120 years, you can return to the money and begin drawing your income.

While these may not be ideal solutions for you, a few may be better than watching your premiums on your long-term care insurance increase by an average of 83 percent on Nov. 1. If you file a claim for your benefits and it is denied, you'll find the help of an attorney quite valuable.

Source: Kiplinger, "Alternatives to Long-Term Care Insurance," Ann Vanderslice, Sep. 30, 2016

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