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Some people in Kansas City have given thought ahead of time to care planning, and in anticipation of the fact that they may need in-home health care in their old age have purchased long-term care insurance. However, that industry is seeing some tough times. For example, one long-term care insurance provider, John Hancock, has stated that it will no longer sell such policies.

While this is certainly not good news, in general, it may be possible that insurers will be bound to honor the policies of those who already hold them, due to insurance industry regulations. For example, even though it is no longer selling new policies, John Hancock still must honor its 1.2 million existing policies.

Moreover, two long-term care insurance companies have taken steps to remedy this by offering insurance policies that combine life insurance with long-term care. These policies do not cost as much as traditional long-term care policies, making them more attractive to consumers who may have avoided purchasing long-term care insurance due to the cost.

For people between 45-years-old to 65-years-old, long-term care insurance could cost between $1,000 to $4,000 annually, and would provide the insured with several hundred thousand dollars when the time comes that the insured needs care. While these costs may be prohibitive for some, others have felt they were worth it, should they become sick or simply unable to take care of their daily needs.

These new hybrid policies allow people to purchase a life insurance policy that, while it has a lower death benefit, allows policyholders to be reimbursed if they need long-term care. But, there are limits.

For example, a $300,000 life insurance/long-term care insurance policy may have a maximum $200,000 payout for long-term care, but no more. Some traditional long-term care policies, while more expensive, may provide more benefits.

In the end, consumers need to calculate what they expect they may need in long-term care for the future. And then, people should use that information to determine what kind of long-term care policy, if any, they will purchase. Elder care planning is important, and putting some thought into it ahead of time, can save not just money, but also give you peace of mind.

Source: The New York Times, “Combine Long-Term Care With Life Insurance? Do the Numbers First,” Paul Sullivan, Dec. 9, 2016