Getting older is inevitable—lacking the financial means for long-term care isn't.
Long-term care insurance is an excellent way to ensure you'll have the proper assistance when you need it.
However, There are good alternatives to long-term care insurance in 2020.
Each of those opportunities has its advantages and disadvantages, and no single option is going to work best for everyone. Let's have a look.
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Buy A Hybrid Long-Term Care Policy
Unlike a regular long-term care policy, a hybrid long-term care/life insurance policy can cover you whether you need future long-term care or not.
A hybrid long-term care policy gives you:
While many people find hybrid policies attractive, they're not right for everyone.
These plans can be expensive—up to $8,000 per year if you pay monthly or upwards of $150,000 as a lump sum.
Save Money For Long-Term Care
Instead of purchasing a long-term care policy, you can also save money in a designated account.
This option puts you in complete control of your funds in a way that no insurance policy can.
Advantages of using savings for long-term care include:
Saving money for long-term care may mean you need to plan earlier than your mid-50s or 60s, as many people do with insurance.
You'll need to know how much money you have available—and how much you're willing to spend on your care.
Using savings for long-term care also comes with the inherent risk of running out of funds.
Short-Term Care Insurance
This alternative is exactly what it sounds like, and it may suit your needs if you don't anticipate needing years of care later in life.
What does short-term care insurance give you?
The downsides to short-term care insurance, when compared to long-term, are few.
However, if you anticipate that you will need more than 12 months of care, this may not be the option for you.
Critical Care Or Critical Illness Insurance
Critical illness insurance works a little differently than long-term care insurance in that it isn't designed to care for you long-term at all.
Instead, it helps you recover from a severe illness and may cover expenses that long-term care won't or that you can't afford on your own.
Let's look at what critical care insurance gives you as an alternative to long-term care facilities:
Be wary of low critical illness insurance premiums. They may look attractive, but often low premiums come with high deductibles.
The idea of these plans is to allow you to save for those out of pocket expenses.
Annuities With Long-Term Care Riders
If you choose to use an annuity with a long-term care rider, that means your insurance company will pay you a sum after you retire for you to use as income. If you can afford to put away a large amount of money early on, this type of policy may be right for you.
Annuities with long-term care riders give you:
These policies can work well for people who aren't sure whether they'll need long-term care as they age.
The high initial investment requirement is this alternative's biggest drawback.
Deferred Annuities For After Retirement
Deferred annuities for after retirement work a little differently than annuities with long-term care riders.
Instead of automatically getting monthly payments from your annuity, you can choose what you do with it.
What does a deferred annuity mean for your long-term plans?
With a deferred annuity, keep in mind that you might have to pay taxes on the amount you save. You may also be able to collect death benefits.
Sell Your Life Insurance Policy
Selling your life insurance policy for cash value can provide a substantial source of funds to help you pay for your long-term care.
How can selling your life insurance policy work for you?
The obvious drawback of this option is the loss of your death benefit for loved ones.
The less obvious issue is that the income you receive will be taxed, and brokers tend to take steep commissions.
Start A Side Hustle
Since many people purchase long-term care insurance around when they plan to retire, starting a side hustle can provide the funds you need to pay for it.
It's not uncommon to find that you need something more after retirement. You could fulfill this need by starting a small business or getting a part-time job.
How can a side hustle help you afford long-term care?
A side hustle may not pay for everything you need and may take some times to see a substantial return.
However, it's definitely something to consider; it probably also needs to be an activity you can safely perform in consideration of your health.
A side gig can supplement your income and make long-term care more affordable.
If you're looking for alternatives to long-term care insurance, you have plenty of options.
Those listed here aren't the only ones, but they are some of the most common and readily available.
You'll need to consider your health, your predisposition to health conditions, your financial circumstances, and the cost of the care you expect to need or want to figure out what works best for you.
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