Long Term Care Insurance as an Estate Planning Tool

Long term care insurance is one of the many estate planning tools that may be considered as you prepare for the future. Although it typically isn’t the best tool for most people, it is an option you can consider and discuss with your estate planning attorney. At the Law Offices of David Knecht, we customize your estate plan to your needs, and we are happy to discuss the pros and cons of many estate planning tools. This article will provide an overview of what long term care insurance is, how it is used, and cost factors with information summarized from an article published by smartassets.com.  

What is long-term care insurance?

  • Long-term care insurance helps cover the costs of long-term care services, such as an assisted living facility, adult daycare or a nursing home when you can no longer perform independently, the basic activities of daily living. 

Why would someone consider long-term care insurance?

  • Of that group, 20% will need it for more than 5 years. 
  • Often health insurance does not cover these costs and Medicaid and Medicare have limitations that can impact your savings and assets.

 What are the pro’s of long-term care insurance?

  • Asset preservation – An insurance policy may protect your savings, but keep in mind that the policy typically does not cover everything.
  • More care options – the goal here is to enable you to pay for the type of services that you need when that time comes. 
  • Family concerns – you may want to prepare to avoid putting a burden on your family to care for you in the future.

How much does long-term care insurance cost?

  • An example illustrates the high cost: 55 year old man in the U.S. can expect to pay a premium of $2,220 per year according to a 2022 price index survey conducted by the American Association for Long-Term Care Insurance.
  • In the example, the coverage would be $165,000 in benefits when the policyholder takes out the insurance and $400,500 at age 85.
  • Long-term care insurance costs vary widely depending on factors such as health condition and age. 

How should I plan for long-term care?

  • Planning for your long-term care needs in not simple. The best plan will consider your specific assets, health, circumstances and family needs. 

Contact an Experienced Estate Planning Firm

If you have questions about any estate planning issue, we are here to help. At the Law Office of David Knecht, we have extensive experience with estate planning and look forward to exploring all your options for estate planning with you to create the best plan for you and your loved ones.  Contact us at 707-451-4502.