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Long term care and asset based long term care

Maximize flexibility with asset-based long-term care.

Nearly 70% of people who are now age 65 or older will require long-term care at some point in their lives1, making long-term care insurance an important consideration when creating a holistic retirement plan. But age isn’t the only factor when considering long-term care insurance needs. Unexpected injury or medical complication can necessitate long-term care at any age.

Having long-term care insurance supports your financial well-being if a need for care arises. While long-term care premiums can be high, it’s important to understand that costs associated with care may present themselves in hidden ways and extend beyond monetary demands, specifically if a family member is your caregiver. Leaving the workforce to care for a loved one is a noble and generous decision, but the loss of income can prove strenuous to caregivers and extended family. And if you or your loved one wind up not needing care, you get no return on the money you paid in premiums for a traditional long-term care policy.

That’s why asset-based long-term care can be a handy asset in your financial plan, providing you with coverage for care as well as the flexibility to change your mind if your financial needs change in the future.

Additional Opportunities

Asset-based long-term care is a financial strategy that uses insurance to cover expenses associated with long-term care. As you would with a typical insurance policy, you pay a premium for asset-based coverage. The cost of care varies depending on a variety of factors such as your age, health and desired coverage amount. These plans tend to be more expensive than traditional long-term care policies, but provide you with flexibility and long-lasting value in your financial plan in the event that long-term care is not needed.

When a traditional long-term care policy goes unused, the premiums paid over the years are typically lost. Asset-based long-term care insurance is different because it not only covers the potential costs of long-term care but also provides additional benefits. It offers a cash value component that grows over time. If you live a long life and require care, the cash value is there to support you. If you pass, a death benefit is provided to your loved ones. Furthermore, if you decide you no longer want the policy, there is a surrender value available to you.

Asset-based long-term care is designed to address potential long-term care needs, but additionally, the flexible value of any unused insurance can be used to supplement retirement income, transfer to your estate or leave an inheritance benefit for your loved ones. Some asset-based long-term care policies also offer inflation protection that increases your coverage over time to keep up with rising costs.

Raymond James recommends making insurance a key part of any strong financial plan. A thoughtful conversation with your financial advisor to discuss your family history and assess your personal financial goals and those of your loved ones can help determine whether an asset-based long-term care policy is right for you.

1LongTermCare.gov, “How Much Care Will You Need?” February 2020

These policies have exclusions and/or limitations. The cost and availability of life insurance depend on factors such as age, health and the type and amount of insurance purchased. As with most financial decisions, there are expenses associated with the purchase of life insurance. Policies commonly have mortality and expense charges. In addition, if a policy is surrendered prematurely, there may be surrender charges and income tax implications. Guarantees are based on the claims paying ability of the insurance company.

Long-term care insurance products may not be suitable for all investors. Surrender charges may apply for early withdrawals and, if made prior to age 59 1/2, may be subject to a 10% federal tax penalty in addition to any gains being taxed as ordinary income.

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