Guaranteed Issue Long-Term Care Insurance

Louis LopesWritten by Louis Lopes, CLU ChFC

Have you been turned down for long-term care insurance?

Don't worry - if you're between the ages of 55 and 80, we have a solution for you.

Traditional long-term care insurance providers assess an individual's eligibility for coverage by evaluating their medical background and records.

If the insurance company discovers a serious health issue, they may consider the person too risky, and as a result, decline their application.

The good news is, one of our providers offers a unique solution that extends long-term care insurance to anyone with at least $50,000 to invest, regardless of their health. This is achieved by using an annuity to utilize assets for long term care expenses when needed. We've also included a real-life example to further illustrate the plan's potential.

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    What is Long-Term Care Insurance?

    Long-term care insurance is a form of health insurance that provides financial assistance for in-home care, hospice, or assisted living expenses. These benefits are not triggered by a specific illness, instead the insured becomes eligible for benefits when they are no longer able to perform two or more of the six activities of daily living.

    Unlike hospital and doctor bills, these expenses are not covered by Medicare or traditional health insurance plans, so they will need to be paid out-of-pocket. Alarmingly, only 3.3% of the population has long-term care insurance and 70% of seniors over the age of 65 are expected to need some form of long-term care during their lifetime.

    What are the six activites of daily living?

    If you are unable to perform two or more of these activities, your long-term care insurance will help with the cost of your assisted living or in-home care.

    1. Bathing - the ability to clean oneself, perform personal hygene like shaving, and get in and out of a bath or shower
    2. Transferring - having the ability to walk and get in or out of a chair, or bed
    3. Eating - being able to feed oneself by getting food into the body from a plate, table, or cup, intravenously, or by feeding tube
    4. Toileting - the ability to get oneself on and off the toilet and perform related personal hygene
    5. Continence - having the ability to control one's bowels and bladder or maintain control when urinating or defecating
    6. Dressing - being able to cloth oneself without struggling with buttons or zippers. This can also include the removal and attachment of braces and artificial limbs

    The cost of long-term care has surged since the COVID pandemic. In 2021, according to Genworth,  the cost of a private room in a nursing home exceeded $9,000 a month. By 2030, more than 24 million Americans will require some form of long-term care, doubling the current demand for providers that are already struggling to meet the existing need.

    As a consequence, this will inevitably result in higher long-term care costs, making long-term care insurance even more valuable. The good news is, if your health has prevented you from qualifying for a policy in the past, or you've recently been declined for long-term care insurance, you have an alternative.

    Most providers will evaluate your overall health and medical history to determine if you are eligible for long-term care insurance. This precludes some people with health issues from getting the coverage they need. Thankfully, there is one provider that offers long-term care insurance to people with health concerns.

    How Do I Purchase Guaranteed Issue Long Term Care Insurance?

    Guaranteed issue or guaranteed acceptance long-term care insurance is available to legal U.S. residents of every state except New York, California, Indiana, Maryland, Massachusetts, and Virginia. Your health does not affect your eligibility for coverage, however you will need a minimum deposit of $50,000 to fund your annuity.

    Coverage is available to individuals between the age of 65 to 80, and the amount of leverage will depend on the age and risk classification determined during the underwriting process. The cash value of the annuity will continue to earn interest and grow even if you never require long-term care.

    Unlike traditional long-term care insurance, which typically takes 8-12 weeks for approval, getting accepted for guaranteed issue long-term care insurance only takes a few weeks. After your application has been approved, you can review the plan's benefits and risk class before accepting your policy. The following section provides an example of how the plan works.

    Real World Example to Illustrate the Plan's Benefits

    Here's a real-life example: Meet David, a 69-year old man in decent health. Despite his good health, David faced several rejections from different long-term care insurance providers. These rejections were based on concerns about David's physique; some providers considered him too slender when evaluting his height and weight.

    However, when David applied for an annuity with a long-term care insurance rider, he was approved at a preferred rate. He funded his annuity with a $100,000 deposit, and in the event he needs long-term care, he will receive $311,000 in benefits paid out tax-free over five years.

    If David doesn't require long-term care, the $100,000 will continue to grow in value through tax-deferred interest. The way he allocated his $100,000 will determine how much interest is earned. The long-term care benefits are guaranteed to grow at annual rate of 2%, regardless of the interest he earns on the $100,000.

    David initially planned to transfer $100,000 from his savings account to the annuity. However, his agent suggested a better option. He could transfer the $100,000 from his existing annuity through a 1035 exchange. Since his initial deposit of $60,000 had grown to $100,000 on a tax-deferred basis, he hadn't paid taxes on his $40,000 gain.

    By using the new annuity for long-term care benefits, he could potentially avoid taxes on that $40,000 gain. David also took advantage of the Wellness Program offered by the insurance company. By participating in a program that provided a personalized aging map with immediate health improvement actions, he earned credits that could increase his pool of long-term care benefits by nearly 15% over time.

    The program also offered perks like special pricing on devices, apps, and programs to improve various aspects of health. Thankfully, David was in relatively good health overall. Even if he had been impaired, unable to perform two of the six activities of daily living, or cognitively impaired, he would still have been approved for coverage.

    However, his $100,000 deposit would have provided a smaller pool of long-term care benefits, perhaps around $136,000 instead of $311,000. He would still have avoided paying taxes on his $40,000 gain, and the benefits would still increase by 2% annually.

    Don't Wait To Buy Long Term Care Insurance

    It's important to note that this program has a 4-year vesting schedule. This means that your cannot go on claim during the first year of the policy and receive a full monthly benefit. The benefits increase the younger you are when you apply, and it's important to remember that despite our best intentions, our health rarely improves with age.

    According to the U.S Department of Health and Human Services, someone over the age of 65 has a 70% likelihood of requiring long-term care during their lifetime, and the cost of long term care services will only continue to increase. This is why delaying is not in your best interest. Secure your coverage now while you are healthy, and allow your cash to grow.

    Transferring your rainy-day money into an annuity with a long-term care rider can provide both a safety net and a much larger pool of benefits for long-term care needs in the future. To learn more about long-term care insurance and the benefits it can provide, see our article; "What is Long-Term Care Insurance and How Does it Work?

    We're Here To Help

    Our independent life insurance agency represents 63 top-rated providers. This allows our experts to anonymously shop the market of your behalf and match you with the best company for your needs and health profile. Most importantly, our comparative shopping service is always free, and their is not cost to apply for coverage.

    If you are interested in reviewing your options for long term care insurance, or if you have been declined for long term care insurance before, we can help. We're licensed in all 50 states and our agents offer at least 10 years of experience. Give us a call today, toll-free at 855-247-9555, or click on the map below to get started.

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    Written by:

    Louis Lopes

    Louis Lopes, CLU ChFC

    Chartered Life Underwriter, Licensed Life and Health Agent

    Louis has been in the insurance business for over 30 years. He specializes in “high risk” cases as well as more complex coverages for long term care, disability, and estate planning.

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