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Avoid the Long-Term Care Insurance Dilemma

Long Term Care

I am sure you have either been approached or have heard from others about proposals to take long-term care insurance. You start at age 50 or 55 and pay premiums into equity that is supposed to help your expenses later in life. You can summarize in 3 points some of the issues with LTC or long-term care insurance vs. an annuity plan.

1. These policies usually cover on long-term care and bills. But you might need money to pay rent, food or other incidentals. However, annuities don’t care how you spend your money.

2. With long-term care insurance your rates can change so policy providers can have rate hikes. Policyholders would either have to pay up or walk away from their investment. Just imagine if you had a lease and in the middle of your lease they double your payments and there is nothing you can do.

3. Furthermore, as seen recently in the news with CNA families are having a hard time collecting benefits and have to take action in order to collect.

Some of the companies that are in the business of long-term insurance are Loews, Genworth, Manulife, Metlife and Prudential.

Interestingly if you think long-term care insurance is a bad deal for the policy holders it is not that much better for the insurance providers. In fact many are trying to get out of providing this service. Many have filed requests to policy makers to increase rates. It is usually very hard to figure out who is disabled enought to be eligible to collect and manytimes costs are run in legal collections. If you invest $100,000 into a deferred annuity at age 60 you can collect $3,240 a month beginning at age 80. This is possible since the insurers gets to invest this money for 20 years and the fact that many isured individuals don’t live long enough to collect and therefore insurance provider can therefore make the payout and make profit. Annuity is only good for those in good health and when you are investing spread in different companies and due dates for diversity and safety.

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