The Perfect Storm

long-term care insurance crisis retirement reverse mortgage

The Perfect Storm: Long Term Care premiums skyrocket while fewer qualify

Long-term-care premiums are skyrocketing and many who apply are turned down. Where can older Americans turn to secure their future?

“Right now, if you’re in your mid-50s and healthy, a typical individual long-term care policy would cost around $3,000 a year. Even without premium increases, that would be close to $100,000 over 30 years”. Those are the words of columnist Howard Gold in his September 16th MarketWatch column.

Countless middle-aged workers decided to protect their financial future against costly long-term care in their elder years by purchasing a long-term care insurance policy. A move many financial advisors actively encouraged. Today these policyholders are seeing huge premium increases as payouts for care increased and individuals kept the policies longer than anticipated. Some of the 8 million-plus Americans who have such a policy are facing a financial Sofie’s Choice having to absorb the cost of continued premium hikes or cancel their policies losing the future benefit that years of payments were to secure- all at a significant financial loss. Those wishing to apply for coverage will find getting approved more difficult. “According to the American Association for Long-Term Care Insurance, 44% to 51.5% of people over 70 who apply for a long-term care policy are declined by insurers”, writes Gold. The percentage of those declined coverage drops to about 20% for those in their 50’s. Read More

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One Financial Planner Suggests Two LTC Insurance Alternatives

reverse mortgage newsIf you were to eavesdrop on a typical meeting with someone in their 50’s with their financial advisor, chances are you would here the sensible advice to purchase long term care insurance. This practical recommendation is rooted in the fact that nearly 70% of those aged 65 and older will need long term care services at some point in their lifetime. However skyrocketing long term care premiums has one financial planner recommending alternatives.

George Gagliardi is a certified financial planner focused on creative solutions to help preserve and grow his clients’ assets. A recent MarketWatch article shows that Gagliardi is skeptical of traditional retirement advice when it comes to protecting his client’s assets from the ravages of health emergencies and long-term care costs. Long term care costs are not the only threat, the other is the risk of exploding premium rates.  Federal employees participating in the long-term care insurance program learned this harsh lesson in 2016 when their premiums jumped 126%. Two choices were offered- pay the higher premium and retain your current coverage or pay the same premium for less coverage. A spike in premiums had a direct impact on a senior’s cash flow and quality of life.

Few financial planners stray from conventional recommendations and approaches to asset management and preservation. Unfortunately, conventional wisdom yields typical results. Gagliardi takes a different approach favoring two alternatives: hybrid long term care policies and the Home Equity Conversion Mortgage.