Long-term care insurance can be an important planning tool, but it may not be affordable or available to everyone.
Fortunately, there are other strategies that may help prepare for future care expenses:
• Self-funding through dedicated savings and investments
• Annuities with long-term care riders
• Life insurance with long-term care riders
• Health Savings Accounts
• Medicaid, for those who qualify
Each option has different costs, requirements, tax considerations, and tradeoffs. The right approach depends on your health, financial resources, family situation, and broader retirement plan.
Long-term care planning is not simply about purchasing insurance. It is about creating a strategy before care is needed.
How does long-term care fit into your retirement plan?
Fixed annuities are long-term investment vehicles designed for retirement purposes. Gains from tax-deferred investments are taxable as ordinary income upon withdrawal. Withdrawals made prior to age 59 ½ are subject to a 10% IRS penalty tax and surrender charges may apply.
Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing.
Insurance and rider guarantees are based on the claims paying ability of the issuing company.