How Long Will You Have To Pay Long-Term Care Insurance Premiums?
No one likes to pay insurance premiums of any kind and long term care insurance is no exception. The ony why we pay these premiums is because the alternative leaves our retirement income and investment assets exposed to high risk if long-term care becomes necessary and also we will have to pay for the care ourselves. It is no secret that the cost of health care facilities care can quickly drain your retirement funds and force a retiree into financial ruin. By purchasing long-term care insurance, a policyholder is accepting a small loss each year in the form of premiums paid. This small loss helps ensure that he or she will not be wiped out financially by unmanageable long-term care costs in the future.
3 Choices for Premium Payment Periods
For those not familiar with long-term care insurance often wonder how long the premiums will need to be paid. The answer is that there are three choices for the premium payment period usually offered by insurance carriers. The most popular choice by far is a ” lifetime ” payment period that requires the payment of premiums until death or until the policy is started. Some object to paying these premiums for such a long period of time. In response to that objection, I usually ask prospective clients to consider other forms of insurance that they most likely own. For instance, would they expect to only pay premiums for health or would they prefer medical insurance for a short time only, or do they plan on paying those premiums for life? Would’t they expect to pay auto insurance premiums for as long as they drive? Isn’t it reasonable to pay homeowners insurance premiums as long as they own a house? As long as the financial risk is present, the payment of insurance premiums is prudent. Since the risk of needing long-term care is present for as long as we live, long term care insurance premiums can be expected for the remainder of our life.
Shorter Premium Payment Periods Equal Higher Premiums
The second and third ideas of payment of long term care premiums allow the policyholder to condense all of those expected premium payments into a much shorter time. For those under fifty-five years of age, a ” pay to age sixty-five ” option may make sense. For others a ” ten-year pay ” option can also be a good choice. Since the expected premium payments over a lifetime are simply put together into a shorter timeframe, the cost of these premiums is much higher. Therefore, these options usually make sense for policyholders who can take advantage of tax deductions that help them reduce the overall cost of their long-term care insurance.