Types of long-term care plan
Five shapes, from traditional to asset-based. Your health and your budget decide which are open to you.
Book a meeting
Care costs are rising faster than inflation, and what you pay swings enormously with the kind of care and where it happens. The work is anticipating what you might need and matching cover to it.
The five shapes
Traditional LTC
Pure protection, like health coverage: it pays only if care happens. Premiums can start low but may rise at renewal, and nothing comes back if you never claim.
Joint plans
One plan, one shared pool of benefit across a couple. Useful when one spouse would struggle to qualify alone, or to reduce the premium.
Life policy with an LTC rider
Draw against the death benefit early when care is needed. Whatever you use is no longer there for your family, which is the trade.
Immediate care plans
An annuity-based route for people whose age or health closes the other doors. A lump sum starts producing benefit immediately or soon after.
Asset-based (hybrid)
Built on a life policy or annuity with care coverage layered on. The money can serve as a death benefit or income instead, and leverages up if care is needed. Nothing is lost if it is never used.
Coverage, triggers and premiums vary widely. All of them require health underwriting, and the healthier you are the more is open to you.
How the benefit is paid
Two policies with the same monthly maximum can behave very differently, because of how the benefit is released.
Reimbursement
Pays only the qualified expenses defined in the contract, up to the monthly cap, against actual spending. Monthly bills and receipts required, and informal caregivers are limited or excluded.
Cash indemnity
Up to 100% of the monthly maximum arrives as cash. No receipts, no restriction on how it is used, and it can pay a family member who is doing the caring.
A tax point worth knowing
Under the Pension Protection Act of 2006, whose provisions took effect in 2010, benefits from qualifying long-term care coverage, annuity-based plans especially, can be paid free of income tax. That matters a great deal when you are repurposing an existing annuity toward care.
