In the aftermath of well-publicized premium hikes for long-term-care insurance and the departure of some key insurers from the market, many consumers are skittish about buying coverage. But the need for protection isn’t going away. The median cost of one year in a private room at a nursing home has topped more than $80,000 according to a recent surveys. The cost is increasing at a rate of about 5% per year. Round-the-clock home care runs even more.

If you don’t want to buy — or can’t qualify for — standalone long-term-care insurance, here are three other ways to protect your retirement savings from the potentially devastating cost of long-term care. And if you don’t use the benefits for long-term care, the insurance goes toward a death benefit or an annuity.

Here at Benton White Insurance, we highly support life insurance combo policies. Several companies have introduced these new policies that combine life insurance and long-term-care protection. You invest a lump sum or pay premiums for a limited time, and you’re guaranteed to get either long-term-care payouts or a death benefit. For example, if a 55-year-old man invested $10,000 per year for ten years in one plan, he would have a pool of $320,000 in benefits to pay for long-term care, available as a monthly payout of $6,669 for up to four years. If he died without using the long-term-care component, his heirs would receive a life insurance payout as a death benefit. Or, if he used some of the money for care, the death benefit would be reduced by the amount that was used to pay for his care.

These policies may be appropriate for people in their fifties and sixties who still need life insurance but who also want protection against long-term-care costs. Paying the premium all at once shields you from price hikes; some policies that you pay over ten years also guarantee that the premiums won’t rise. Long-term-care benefits are triggered when you need help with at least two daily activities, such as bathing and dressing, or you are cognitively impaired. You can receive care at home, in an assisted-living facility or in a nursing home.

Then, there are annuity/long-term-care policies. A few companies offer a combination deferred an nuity and long-term-care policy that allows you to leverage your investment three-to-one. For example, a $100,000 annuity could pay up to $300,000 in long-term-care benefits. These policies are attractive to people who already own a deferred annuity and want to exchange it tax-free for a combo annuity policy. And it may be easier to qualify for one of these combo policies than for a traditional long-term-care policy.

If you use the money for long-term-care costs, the distributions are tax-free. Withdraw it for other reasons, however, and you’ll pay ordinary income taxes on the earnings. Unused portions of the annuity (minus any long-term-care payouts) may be left to heirs.

Finally, there is longevity insurance. This type of annuity pays out only when you reach a certain age — usually 85. It’s a viable way to ensure that you won’t outlive your savings and to protect against long-term-care costs that often occur at advanced ages. Say you invest $100,000 in one of the available plans at age 65; starting at age 85, you’ll receive approximate payouts of $67,000 per year for the rest of your life. You can use the money for any purpose, including long-term care.

Anyone may buy longevity insurance, regardless of their health status, so it may appeal to people who don’t qualify for stand-alone long-term-care insurance. The downside is that you won’t get anything if you die before age 85.

There are options for long term care coverage even in a market that is still adjusting to higher rates than imagined when this type of plan originated years ago. We have had great success with the life insurance combo policies because of the variety of options available to the insured. The premiums are guaranteed and the underwriting is somewhat less intensive as it is with the regular long term care policy. Plus, premiums for the combo policy isn’t that much more expensive than buying a long term care policy.

We can help! The need isn’t going away and the cost for the care when you are later in life is escalating each year! Contact our office at 615.377.1212 or email us at info@BentonWhite.com if we can help. There is good long term care solution and we’ll be glad to show it to you.

[A portion of this article was taken from Kiplinger Online – “New Ways to Pay for Long-Term Care” by Kimberly Lankford]