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Californians have increasing options for financing long-term care

Many of our readers are familiar with long-term care insurance. However, the market for long-term care financing is evolving rapidly. There are now a number of new options out there that are worth considering.

Currently, just one-tenth of Americans have any plan for long-term care. However, almost 70 percent of us will need it. With the average cost of a private nursing home at close $100,000 a year, that leaves a lot of people who could find themselves and their families in dire financial straits when they are no longer able to care for themselves.

People who are not able to get long-term care insurance or find it too expensive may want to consider life insurance plans and annuities. There are multiple ways in which people can use a life insurance policy to fund long-term care. There are also various types of annuities that can be used.

Some people use reverse mortgages to pay for their long-term care. A possible disadvantage for some people, however, is that the mortgage needs to be repaid when the final person on the mortgage moves out of the house. Therefore, a reverse mortgage may not help you if you need to move into a nursing home or other care facility.

There are a number of new “hybrid” options for funding long-term care as well. Life insurance policies with long-term care riders are increasingly popular. They allow the policyholder to access most of their death benefit if they need it to pay long-term care expenses. People who already have annuities or life insurance policies may be able to exchange them for one of these hybrids or even for a long-term-care policy.

Many Californians assume that their own savings and/or Medicaid will cover any care they need in their twilight years. Others assume that their families will take care of them when they become old or disabled. However, it’s always wise to have a plan in place in case you require care that is beyond your loved ones’ ability to afford or personally provide.

It’s essential to look at all of the options out there and to find the one that’s best for your needs and your family situation. Moreover, once you’ve decided on an option, it’s important to be prepared to make adjustments as your circumstances change.

Source:  Forbes, “New and Unexpected Ways to Fund Long-Term Care Expenses” Jamie Hopkins, Apr. 21, 2014

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