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Paying for long-term care needs without an LTC insurance policy

The need for long-term care is increasing, as our population continues to age. With average life expectancy in the U.S. currently (in 2022) standing at over 79 years old, longevity is quickly becoming one of the top financial risks. This is because people are forced to face all of the other risks – including a volatile stock market, inflation, and high healthcare expenses – for a longer period of time.

Some investors and retirees have protected themselves from the high cost of long-term care (LTC) with LTC insurance. But these policies can be expensive – and what if you pay into a policy for many years but you never need the benefits? Is there a way for you to pay for long-term care needs without an LTC insurance policy?

The answer is yes. One way is through an annuity.

How Even a Short Long-Term Care Need Can Decimate Your Portfolio

Our population is aging quickly. As the Baby Boomer generation gets older, the need for skilled and custodial care services is also increasing. It is estimated that every day until the year 2030, approximately 10,000 people turn age 65. At that point, roughly 7 in 10 people will require at least some type of long-term care services in their lifetime.

The cost of this care can vary, based on where it is received, the type of services that are needed, and the recipient’s demographic location. But overall, the median monthly cost of a private room in a skilled nursing home facility in the U.S. in 2021 was over $9,000. And, with an average need for care at three years, this could create some significant financial challenges.

National Monthly Median Cost of Long-Term Care (in 2021)

In-Home CareCost
Homemaker Services$4,957
Home Health Aide$5,148
Community and Assisted LivingCost
Adult Day Health Care$1,690
Assisted Living Facility$4,500
Nursing Home FacilityCost
Semi-Private Room$7,908
Private Room$9,034

Source: Genworth Cost of Care Survey 2021

Paying for Your Care Costs with an Annuity

Although many people purchase annuities for the lifetime income stream that they can provide, as well as for the tax-deferred growth that takes place in the account, these financial vehicles could also help you to pay for long-term care-related expenses. But not all annuities are the same. So, it is essential that you know how these tools work so you’ll know what you can and cannot anticipate.

One option is to purchase a long-term care annuity. These alternatives to traditional LTC insurance can double or even triple your initial single premium contribution – based on your health condition – to generate a tax-free care insurance benefit. These “hybrid” plans are designed for helping to pay long-term care expenses without destroying your retirement savings.

Another option is to purchase an annuity that includes a long-term care rider. This is an optional benefit that you can add to an annuity contract that helps to pay for qualified care services. Oftentimes, if you end up not using this benefit, you may be able to pass it on to a beneficiary(ies).

Do You Have Potential Care Expenses Covered?

One of the biggest threats to your financial security in the future is a need for long-term care. So, if you have not yet protected your retirement portfolio, it may be time to do so before it is too late. Talking to an annuity specialist is highly recommended.

At Annuity Gator, our key focus is on educating consumers on how annuities work, and how they may help to pay for needs like healthcare and/or long-term care services. If you would like to find out more about how these financial tools work, feel free to contact us by calling (888) 440-2468 or sending an email through our secure online contact form. We look forward to helping you keep your savings protected.

Paying for long-term care needs without an LTC insurance policy

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