3 reasons long-term care insurance is better than paying out of pocket

Long-term care is something most older Americans will eventually need. And, given the high cost of this careit’s important to prepare in advance. Failure to do so could limit your options and put undue pressure on your family and friends when you need care.

One way to reduce the high costs of long-term care is to purchase a long-term care insurance policy, which can help cover the costs of nursing homes, assisted living facilities and in-home caretakers. Another way is to save money to pay out of pocket when the need arises. While choosing the latter option may give you more control over your money, it could be a mistake. Below, we’ll explain why long-term care insurance may be better than paying out of pocket.

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3 reasons why it is better to take out long-term care insurance than to pay out of pocket

There are a few reasons long-term care insurance is better than paying out of pocket for your care, including:

Tax benefits expand your coverage

Qualified long-term care insurance policies come with tax benefits. Not only can you deduct your premiums (up to annual limits based on age) on your tax return, you won’t pay tax on the inflation protection growth in the value of your policy or benefits when you receive them. This can make a significant difference in the amount of money you have to cover the cost of your long-term care when you need it.

Take advantage of the tax advantages of long-term care insurance today.

You are guaranteed long-term care support when you need it

It can be difficult to refrain from using the money you’ve saved for one purpose when another financial need arises. And if you intend to save money To pay for your long-term care expenses out of pocket, you can dip into this money from time to time.

On the other hand, if you take out long-term care insuranceyou will not be able to access your benefits until you have a qualifying long-term care need. So when the need arises, your benefits will be available (as long as you have paid your premiums), regardless of financial needs that arise between now and then.

Long-term care insurance protects your family

Life happens, and when it does, it can be easy to get derailed in terms of saving and maintaining your long-term care fund. But if it happens and you don’t have insurance to fall back on, your family could pay the price.

“The risk of a long-term care event is not just financial,” says Jeff Beligotti, vice president and head of long-term care solutions at insurance company New York Life. “Long-term care events can quickly deplete your retirement portfolio, result in significant caregiving responsibilities for your loved ones, including lost wages due to time off work, and cause emotional distress. »

Even if you intend to aging at home and relying on the support of family and friends, long-term care insurance makes sense. This can give your caregivers some respite and some policies will even allow pay your family and friends for the care they provide.

The essential

At first glance, it can be difficult to decide whether it’s better to purchase long-term care insurance or save money with a plan that allows you to pay for your care out of pocket. But as we dig deeper into the details, the benefits of long-term care insurance become clearer.

Thanks to the tax advantages linked to long-term care insurance, you could have access to more funds than if you had paid out of pocket. Additionally, long-term care insurance guarantees your access to care when the need arises as long as you pay your premiums, and it can protect your loved ones. Talk to a long-term care insurance agent about your options now.