The potential cost of everyday care is huge if you are one of the unlucky people to contract Alzheimer's disease, Parkinson's disease, Multiple Sclerosis, or have a major stroke. I don't think anyone would argue otherwise. Therefore, I am not going to get in-depth into the statistics of the possibility of needing long term care other than to say that there is a better chance of needing long term care at some point during your elder years than there is a chance of your home burning down, and most people protect against that happening by purchasing a homeowner insurance policy. I am also not going to get in-depth in telling you how expensive it can be other than to say that it currently averages around $70,000 per year (higher in some areas like Chicago or New York City) and its costs are increasing at a pace higher than the rate of inflation.
The trouble is, even knowing all of this, only a very small percentage of people have chosen to protect themselves by purchasing long term care insurance. The reasons for not purchasing usually go as follows:
1) "Nothing will happen to me and if it doesn't I'll have wasted alot of money on something that I didn't use."
2) "I can just set aside some money for long term care in a CD, that way if I need if for something else it will be accessible."
3) "Long term care insurance costs too much and I might not need it" (see reason #1)
4) Any and all combinations of the above
THERE IS AN ALTERNATIVE
What many people don't know is that there is a way to get protection from the high cost of needing care resulting from a chronic illness, while not spending all of your retirement money on long term care insurance premiums. In fact, this alternative way that I'm going to show you will allow you to free up more of your money for your own enjoyment, and also even pass money along to children, grandchildren or your favorite charity.
The alternative that I'm speaking of is a special type of life insurance policy called a Linked Benefits Life Insurance policy. Only two major insurance companies that I'm aware of issue these products, but I've found them to be an instrumental part of my practice for people that understand the need of protecting themselves, their families, and their investment portfolio from the ravages of potential long term care expenses, but just can't or won't buy a regular long term care policy.
HERE'S WHAT IT IS
A Linked Benefits Life Insurance policy is basically a regular universal life insurance policy, with a special rider or riders attached to it that multiplies the money invested in it by three or more times if it is used for qualified long term care expenses. If the policyowner never needs long term care services, the original amount invested, plus any accumulated interest, can pass to the policyowner's loved ones tax free(if a beneficiary other than the estate is named and if the policyowner's estate does not exceed the federal estate tax allowance amount) because it is considered to be first and foremost a life insurance policy. Incidentally, many people whose sole reason for not purchasing long term care is that they would be wasting their money if it was never used, love the fact that if long term care isn't needed the money will be passed on to loved ones instead of going to waste. The final advantage of a Linked Benefits Life Insurance policy is that if you decide that you want the money back that you originally invested in it, simply write a letter to the issuing insurance company notifying them of this fact, and they will send you a check, no questions asked! (Note: if the money accumulated any interest during the time it was in the policy, you might be responsible for taxes on those gains.)