Option 1. Self-Insure (Invest) for Your Long Term Care Costs
If the Millers each invest $1,817 ($3,634 combined) for one year and earn 7% (before taxes), they will immediately have a combined $3,634 available for LTC costs. If they invest a combined $90,850 ($3,634 X 25) over 25 years and earn 7% per year (before taxes), they will have a combined $245,936 available for LTC costs. Unfortunately, self-insuring (investing) provides a fraction of the leverage insurance provides. See the chart below.
Option 2. Insure for Your Long Term Care Costs with Traditional Long Term Care Insurance
The Smiths can purchase a Traditional Long Term Care Insurance policy with a $300 per day benefit and a five year benefit multiplier (minimum years of care). After the Smiths each pay $1,817 ($3,634 combined) for one year, they will have a combined $1,095,000 (tax free) available for LTC costs. If they pay a combined $90,850 ($3,634 X 25) over 25 years, they will have a combined tax free $1,095,000 available for long term care costs. Fortunately, insurance provides a multiple of the leverage self-insuring (investing) provides. See the chart below.
Option 3. Insure for Your Long Term Care Costs with Combination Life and Long Term Care Insurance
The Smiths can purchase a Combination Life and Long Term Care Insurance policy with a $300 per day or $9,000 per month benefit and a Lifetime of care. After the Smiths pay a combined $135,000 ($67,500 each), they will have a combined tax free Lifetime (Unlimited) amount available for LTC costs. They also gain a $225,000 tax free death benefit when the second person dies, assuming the policy’s LTC benefits are unused. Fortunately, insurance provides a multiple of the leverage self-insuring (investing) provides. See the chart below.