Long-Term Care Investment Vehicles

What options do you have when it comes to paying for long-term care expenses? Today, we’ll discuss if you should invest in long-term care insurance or seek out other solutions.  

Honest Takes:

Long-term care costs are significant and many long-term care insurers are leaving the space. Some people may say they will just hope they don’t need long-term care, but what does Brian think? What financial vehicle offers savings with a long-term care component? 

You can self-insure, meaning that you can pay for the care should you need it. Large companies often do this for their employees, they self-insure to cover the healthcare needs of employees. You have to look at the internal rate of return, which is the money you put into something and the return you get back. Sometimes you get back nothing if you never need the policy, but you have to remember that it will protect you if you do.  

If you self-insure, maybe you get insurance for part of it to bridge the difference between what you have and what you’d need. You have to look at the math. Brian shares about a client who was being pitched for a whole life insurance policy by someone. Ultimately, they realized the costs were so high that the rate of return was below two or three percent.

One possibility is a living benefit rider in a life insurance policy. Permanent life insurance policies or even some term life insurance policies have this, making it a good solution for some.

Listen to the entire episode or skip ahead using the timestamps below. 

[0:12] Long-term care costs are significant. Should you have long-term care insurance?

[2:35] What’s the internal rate of return?

[5:27] What’s your projected return on an investment?

[7:32] What other vehicle offers a good long-term care component?

Today’s Truth:

“Who cares if it’s tax-free if it didn’t grow? Because if you lose money, it’s tax-free also, right?”

Brian Bowen

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