by Kerry Peabody, Long Term Care Insurance specialist

You’re a saver. You’ve saved diligently (something more people should do) and now you’ve got some money tucked away “just in case.” It’s your rainy day fund. It’s money that you don’t plan to use for anything, and if you can pull it off, it would be nice to leave it to your grandchildren. But, you don’t have any protection against long term care. So, no matter how much you’ve saved, there is still a risk you might need to spend it all for long term care. What if you could keep control of that money, but still use it to protect yourself? “Asset-based” long term care plans will do just that.

Let’s say you’re 65 year old woman, and you have $100,000 in CDs, money market accounts, savings, etc. If you needed long term care, this is the first money you’d need to spend to pay for services. But, with nursing homes costing about $100,000 per year, that may not be enough. Using one of these plans, here’s what you can do.

You could move $75,000 of that money into an asset-based long term care plan. Then, the insurance company would agree to pay up to $158,000 in benefits if you needed long term care services, or if you passed away! So, you’ve  kept $25,000 in savings for emergencies, and you’ve turned your $75,000 into $158,000 – more than double your money. If you were to use $50,000 for long term care, and then pass away, the remaining $108,000 is still paid out as a death benefit. If the money is paid out to you as long term care benefits, there’s no tax. If the money is paid to your granddaughter, as a death benefit when you pass away, there’s no tax. No matter which one happens, you’re guaranteed to get more than double your money out of this insurance policy. But, that’s not the best part.

Something happens a few years down the road and you change your mind. Perhaps they find a definitive cure for Alzheimer’s disease, or a family member desperately needs cash, and you want to help. At any time, for any reason, you can go to the insurance company and get your $75,000 back. This product has  a built-in “return of premium” feature. So, you’re not giving up control of your money; you can still get to it if you need to. Of course, if you take the money back, your long term care protection goes away, so hopefully you won’t have to do that.

There are several of these products available today, so if traditional long term care insurance doesn’t appeal to you, perhaps this will. Let’s face it, you need to have some sort of plan for care, and that boils down to having the money to pay for it. If you’re writing the checks, you’re calling the shots.

Have a great week! Next time, we’ll talk about what long term care insurance plans can pay for.