Most people are told to wait until their 50s or early 60s to consider long-term care insurance. In my opinion, that advice overlooks how dramatically these policies have changed. For many successful
professionals, business owners and families, age 40 is the right time to start looking.
At age 40, you are more likely to be healthy, established in your career and beginning to accumulate meaningful retirement assets. You may also have children, a spouse, a business or other people who
depend on your income. A modern hybrid long-term care policy can address several of those concerns within one financial strategy.
Today’s Policies Are Not the Old Use It or Lose It Plans
Traditional long-term care insurance was designed primarily to pay benefits when someone needed care. If the policyholder never needed care, there was generally no death benefit for the family. That use-it-or- lose-it concern caused many people to postpone or reject long-term care planning.
Hybrid long-term care insurance changes that equation. These policies combine long-term care benefits with life insurance. If you need care, the policy can help pay for home care, assisted living or other qualifying services. If you never need long-term care, the policy can provide a life insurance benefit to your beneficiaries. Some policies may also include a return-of-premium feature, depending on the product and how it is designed.
Starting at 40 Can Mean Being Paid Up Around 50
One of the most important advantages of starting at age 40 is the ability to use a limited-payment design. Many hybrid policies can be funded over 10 years or less. Someone who begins at age 40 may be able to complete the planned premium payments around age 50 and enter the later stages of their career with the policy already paid up.
That can be very different from waiting until age 60 and then trying to fit a new insurance premium into a retirement budget. Starting earlier may also allow each premium dollar to purchase more coverage because the applicant is younger and has a longer period before benefits are likely to be needed.
Your Health Is What Allows You to Buy the Coverage
Money alone does not qualify someone for long-term care insurance. Health is what allows a person to purchase it. Insurance companies review medical history, prescriptions, mobility, cognitive health and other factors before approving an application.
At age 40, many applicants have fewer diagnoses, medications and mobility concerns than they may have 10 or 20 years later. Applying while healthy can provide access to more companies, more policy designs
and potentially more favorable underwriting. Waiting for a health change can reduce those choices or eliminate them altogether.
Life Insurance Protection During the Years It May Matter Most
A 40-year-old may still be raising children, paying a mortgage, building a company or depending on two incomes to support the household. The life insurance component inside a hybrid policy can provide protection during those important working years.
Later in life, the same policy may become increasingly valuable for its long-term care benefits. Rather than purchasing coverage for only one possible outcome, the policy can protect against the financial consequences of both premature death and an extended need for care.
Why Self Employed Professionals Should Pay Attention
Long-term care planning can be particularly important for self-employed professionals and business owners. Their income, retirement plan and business value may depend heavily on their continued ability
to work. They may also have fewer employer-provided benefits than a traditional employee.Qualified long-term care insurance premiums may offer tax advantages for self-employed individuals and
certain business structures. The amount and treatment depend on the policy, the insured person’s age, the business structure and current tax rules. With a hybrid policy, only the eligible long-term care portion may qualify. A tax professional should review the specific policy before anyone claims a deduction.
Some policies may also offer cash indemnity benefits, allowing the insured to receive the available monthly benefit without submitting every care expense for reimbursement. Certain policies include
waiver-of-premium provisions after the insured qualifies for benefits. These features are not identical across companies, which makes a careful comparison especially important.
What Should a 40 Year Old Compare
A good policy comparison should look beyond the premium. Important questions include:
• Can the policy be paid up in 10 years or less?
• Are the premium and benefits guaranteed?
• How much monthly long-term care benefit will be available now and later?
• Does the policy pay cash indemnity benefits or reimburse documented expenses?
• Is inflation protection included?
• What life insurance benefit is available if long-term care is never needed?
• Is there a meaningful return-of-premium option?
• Does the policy waive remaining premiums after a qualifying long-term care claim begins?
Age 40 Is About Building a Better Financial Plan
Shopping for long-term care insurance at age 40 does not mean expecting to need care soon. It means using youth, health and time to create a stronger financial plan. The goal is to protect future retirement
assets before they have been fully accumulated, while also creating valuable life insurance protection during the years when a family or business may need it most.
The right policy will depend on health, cash flow, family responsibilities, tax circumstances and long-term goals. But beginning the conversation at age 40 provides something that may not be available later:
options.
Compare Your Long Term Care Insurance Options
Long Term Care Insurance Advisors, Inc. is an independent insurance brokerage in Eden Prairie, Minnesota. With more than 33 years of experience, Brian Emswiler compares traditional long-term care
insurance, hybrid life and long-term care policies, and annuity-based long-term care solutions from multiple highly rated insurance companies.
There is no cost or obligation to review your options. To learn more or request personalized illustrations, visit www.ltcadv.com or call 952-937-9127.
Important: Policy guarantees depend on the claims-paying ability of the issuing insurance company. Benefits, underwriting, tax treatment and policy features vary. Consult a qualified tax professional regarding your individual circumstances.