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Long term care planning has changed from what it used to be

Long-term care insurance has changed greatly over the years. Because of the upsurge of baby-boomers, long-term care insurance premiums are much higher. Many baby-boomers are either obese or disabled, and this makes the claims expensive because so many have been filed, taking the industry by surprise.

There are fewer insurance agencies who even offer long term care planning with just 20 companies currently. In the past, there were well over 100 that offered the insurance. One in five people are denied because of their health or age. Anyone over 50 is scrutinized carefully and if you have a handicap sticker or plate on your car, you are automatically rejected.

In the past, policies were more accommodating, with a five percent increase yearly and lifetime benefits. There is an upside to today's version of LTC insurance in that it focuses on home care instead of nursing home care.

Additionally, there are three things to look out for with the modern day LTC insurance: paying for something you may not use, not having an inflation clause built in and having a policy that pays all of your future bills or none of them. Be on the lookout for a company that allows you some leeway or a tiered program.

If you cannot qualify for LTC insurance, there are other options to explore. First, having a life insurance policy with a LTC rider may work for you. You won't lose your investment if you don't use the insurance, but it may be expensive and you may use up your benefits over time.

An annuity with a LTC rider is another option. The positive in this is that there is no medical underwriting and the funding stream never dries up. The negative side is that investing that much can be daunting.

Third, a reverse mortgage is possible. There are no physicals or premiums; however, your heirs will either have to pay the loan back or give the home to the lending company.

Lastly, you can self-insure. This is a very expensive option and one that may not be possible for the people who need it the most. Those individuals in the $200,000 to $1.5 million dollar range.

Source: Fox Business, "What's New With Long-Term Care Insurance?" Jay McDonald, May. 21, 2014

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