Better Alternative to Long-Term Care Insurance

skyrocketing_health_care_premiums_patrick_farberAny retirement plan worth a grain of salt addresses the potential cost of long-term medical care.  You or your spouse are very likely to need some sort of personal help getting along during retirement. Whether the help comes to your home or you live in an assisted living facility, the potential cost is VERY high.


It’s a fear based in reality. Fidelity Investments estimates that the average couple retiring in 2013 will spend about $220,000 on medical care (It’s much more expensive in this area). Meanwhile, almost 70% of people age 65 will eventually require some level of services to meet their personal care needs over an extended period of time, according to the Centers for Medicare and Medicaid Services.

For the past 20 years, many prudent retirement planners were purchasing long-term care insurance to protect themselves, unfortunately many of those policies were under-priced and the insurance companies keep raising their premiums, with their state’s permission, to a point where the policy becomes unaffordable. The average cost of a policy has jumped 80 percent for a 55-year-old couple, to more than $3,500 annually last year from less than $2,000 in 2007, according to industry statistics.

Many big name carriers including John Hancock, Metlife, Allianze and CNA have gotten out of the business (old policies will be honored). Genworth Financial is the leading current insurer and they recently announced they will be making large premium increases to most of their older policies.

My favorite alternative for people who don’t want their life savings devastated by long-term care expenses is…..

Life insurance with an option to use the death benefit to pay for long-term care expenses


The Hartford’s LifeAccess life-insurance rider allows policyholders to use the accelerated benefit for any reason, such as building a wheelchair ramp or hiring a relative to provide home care, as long as he or she has received a diagnosis of a chronic illness. Some policies are more restrictive, or require a terminal diagnosis, before paying out.

Life insurance with a chronic care riderWhat It Is 

The life insurance rider gives a policyholder, who is certified as chronically ill by a licensed health care practitioner and otherwise meets the terms of the rider, access to up to 100% of the death benefit of their life insurance policy. The insured can use up to 2% of the death benefit per month. So with a $500,000 death benefit, assuming you qualify, you could receive up to $10,000 per month.

Why It Is Different 

The Hartford invented the LifeAccess Accelerated Benefit Rider and earned a patent in 2011. Like an indemnity, the rider begins paying once the client is certified as chronically ill. The benefits can be used for any expense–to pay a family member to provide care, to buy groceries, to make a home handicapped-accessible, for professional care, medical supplies or medication, etc. No receipts are required. The rider is more affordable than long-term care insurance and its price will not fluctuate. Clients will not “lose” the benefit if they do not “use” the benefit. The client’s heir will receive the life insurance policy’s death benefit if the value of the policy was not accessed.

The Benefits of LifeAccess Accelerated Benefit Rider®  Source: The Gilbert Group

LifeAccess Accelerated Benefit Rider® (LAABR)

















By planning ahead, you will vastly improve your ability to get the help you want in your very own home from the people you love. If you would like to take a look at this option for your retirement planning, contact us for a complimentary consultation.



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