Welcome to Citizens Wealth Management Group
The Changing Face of Long-Term Care Insurance
There is both bad news and good news when looking at long-term care insurance. Long-term care is essential for many in the Baby Boom generation. The over-65 demographic in the U.S. is expected to grow from 39 million to 51 million people between 2009 and 2019.[i] At age 65, this group can expect to live to age 83,on average. While that may be welcome news to many, it should put preparing for the cost of long-term care high on their to-do lists because most people over the age of 65 need more than one or two years of long-term care.[ii]
The Bad News: Long-term care policies are less affordable
Recently, consumers and financial advisors have begun to question whether stand-alone long-term care insurance is financially viable. During the past five years, 10 of the top 20 companies offering individual long-term care policies have abandoned the market because increasing longevity, uncertain care costs, low interest rates, and a lower-than-expected lapse rate created an environment in which they could not afford to keep issuing policies.[iii] Companies that still offer stand-alone long-term care policies have dramatically raised premiums on new contracts and retain the right to increase rates, when needed, on new and existing policies. Many also have limited benefits and benefit periods. As a result, it’s fair to say fewer and fewer people will be able to obtain and maintain traditional stand-alone long-term care policies.
The Good News: An alternative is available
Many industry experts believe that Linked Benefit/Hybrid Products provide a sound alternative in the current economic climate. A hybrid product is a life insurance policy with a long-term care rider. The rider allows a portion of the death benefit to be paid out to cover long-term care expenses. This type of policy appeals to many, especially if they are unsure about whether they will ever need to use the insurance. With a long-term care rider, if you never need long-term care, your beneficiaries will receive benefits. Also, unlike traditional long-term care policies, which may increase your premium, premiums for hybrid products typically are fixed. For people with a limited budget or tight cash flow, this may be very attractive.Riders are additional guarantee options which are available and may carry additional fees, charges, and restrictions. Use of the long-term care benefits will reduce the death benefit of the policy. You should review a contract carefully before purchasing. Guarantees are based on the claims-paying ability of the issuing insurance company.
While a hybrid insurance solution doesn’t eliminate all of your potential long-term care risk as a traditional long-term care policy may, knowing you have some protection can provide peace of mind.
[i] Centers for Medicare and Medicaid Services, National Health Expenditure Projections 2009-2019, September 2010 (https://www.cms.gov/NationalHealthExpendData/downloads/NHEProjections2009to2019.pdf)
[iii] Chicago Tribune, Long-Term Care Dilemma, April 13, 2012
Choosing a Retirement Plan that Fits Your Business
To choose a plan, it’s important to ask yourself four key questions.
A Primer on Dividends
A company's profits can be reinvested or paid out to the company’s shareholders as “dividends."
Acres of Diamonds
In life it often happens that the answers are right in our own back yards. This may be particularly true of investing.
Every year the IRS releases its a of tax scams, spotlighting some ways that people try to separate you from your money.
In investments, one great debate asks the question, “Active or Passive Investing: Which Is Better?”
The tax rules that govern donating art are complex and confusing. Take a closer look.
Here are some examples of deductions from the IRS that were permitted and some that were, uh, too creative.
The true cost of raising a child may be far more than you expect.
For many, retirement includes contributing their time and talents to an organization in need.
This calculator compares the financial impact of leasing versus buying an automobile.
This calculator estimates your chances of becoming disabled and your potential need for disability insurance.
This calculator will help determine whether you should invest funds or pay down debt.
Estimate how many years you may need retirement assets or how long to provide income to a surviving spouse or children.
Estimate the maximum contribution amount for a Self-Employed 401(k), SIMPLE IRA, or SEP.
This calculator compares the net gain of a taxable investment versus a tax-favored one.
Principles that can help create a portfolio designed to pursue investment goals.
The importance of life insurance, how it works, and how much coverage you need.
There are some key concepts to understand when investing for retirement
There are a number of ways to withdraw money from a qualified retirement plan.
There are some smart strategies that may help you pursue your investment objectives
How federal estate taxes work, plus estate management documents and tactics.
There’s an alarming difference between perception and reality for current and future retirees.
With alternative investments, it’s critical to sort through the complexity.
Are you ready for retirement? Here are five words you should consider.
Investors seeking world investments can choose between global and international funds. What's the difference?
$1 million in a diversified portfolio could help finance part of your retirement.
Pundits say a lot of things about the markets. Let's see if you can keep up.