Broker Check

Long-Term Care: Protecting Your Family with Guarantees*

| May 27, 2019

When it comes to the need for long-term care (LTC), there are basically three choices:

  1. Ignore it
  2. Self-fund or self-insure it
  3. Leverage existing assets for funding

Which one are you doing right now? If you’re like most Americans, you’re going with the first option.

Perhaps people don’t know about LTC or they just don’t want to deal with it. But the problem is, for those age 65 and older, there is a 52 percent chance they’ll need some source of funding to handle LTC, according to AARP.

Thankfully, there are different types of financial planning tools to address LTC costs, and none of them include paying out of pocket or draining your life savings for care.

Guaranteed Protection for Your Family

One such tool is Annuicare, which is an insurance vehicle that can both produce retirement income and provide LTC benefits. We at Cornerstone Financial Services like this tool because it can reposition and leverage existing assets to protect loved ones from the emotional and financial stress LTC can cause – especially if the need is sudden.

“Qualified” money from a 401(k) or other retirement account that hasn’t been taxed yet can be used to fund Annuicare. Money that has been taxed yet, known as “non-qualified” money, can also be used.

Let’s look at an example. Say you have $100,000 in a qualified account. That money could be used to fund an Annuicare policy and grow at roughly 3 percent per year safely (free from stock market influence).

From day one of the policy, the $100,000 principal would double to $200,000 of LTC income and protection. That’s one of the nice features of Annuicare. And as your money grows within the policy, so does your LTC income.

Fast forward five years and the principal balance would have safely grown to $125,000. And with the Annuicare provisions, your LTC income would again double, this time to $250,000. And the best part is you can never lose the principal amount invested or any gains earned.

Additionally, married couples can get one policy to cover both spouses, called a “joint policy,” that can provide LTC protection and income for both people. And if you need the money for other things, you still have access to the cash value.

Many Options, But Action Required

Sorting out LTC funding is easier when time is on your side. In other words, taking care of it early is less expensive than waiting until you need it later in life.

So, if you’re one of the many American ignoring LTC, perhaps now is a good time to get some professional help. There are several options available to make sure you and your family are not bowled over by LTC costs. But no matter what financial tools you employ, having any plan in place for LTC funding is better than ignoring the situation – that could be the most expensive (and most stressful) plan available.

Securities sold through CoreCap Investments, Inc., a registered broker-dealer and member FINRA/SIPC; advisory services offered by CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial and CoreCap are separate and unaffiliated entities.

Guarantees and protections are subject to the claims-paying ability of the issuing company and compliance with product terms.