Estate planning: Long-term care (LTC) insurance can protect assets.

Investors nearing retirement might want to consider purchasing a long-term care (LTC) insurance policy to help minimize the impact of nursing home expenses on the portfolio.

Granted, while an LTC policy many not offer full coverage of such costs, including in-home care, the insurance is designed to reduce major drawdowns out of a retiree’s overall savings. In such cases, policyholders can go to their Social Security, or pensions, to pick up the nursing home cost differential.

For example, if a nursing home expenses total $8,000 a month, but only $3,000 of it is picked up by your pension and Social Security, the rest of the money might have to come from a 401(k), IRAs and Roth IRAs. Even so, and with an LTC policy, any shortfall might well be covered by the policy—nursing-home ‘per day’ benefits may accumulate quicker the longer you own the policy, and if an ‘inflation protection’ rider is included.

Today’s LTC policies can also offer the option of using ‘in-home health assistance’ instead of traditional nursing home care. Moreover, some policies provide for limited care in an assisted living facility.

Guidelines used by insurance companies in determining when a coverage kicks-in  are defined by the number of ‘daily tasks’ the insured is unable to perform on their own. This might include an inability to cook one’s own meals, or bathe, in which case the policy could provide assistance when needed.

Contact us to learn more about retirement planning and strategies you can use to protect assets in case of major health issues.