When you transfer the risk of paying for long-term care to an insurance company, you can choose from three types of long-term care insurance products on the market. Today we start with the traditional standalone option.
What is Standalone Long-Term Care Insurance?
The standalone product designs offer pay-as-you-go premiums. Here the insurance carrier takes on all of the risk.
Think of this standalone product like you do your auto insurance. You figure out the amount of coverage you need, what your deductible will be, pay premiums and hope that you are never in a crash.
Standalone products are the most customizable, the hardest to qualify for from an underwriting standpoint and the least costly insurance solution if you end up needing care.
These are tax-qualified policies which means that benefits paid are tax free and premiums may be deductible depending on how you file state and federal taxes.
Only standalone products can be designed as Partnership policies that provide additional protection of assets and income from Medicaid resource reduction requirements. For a policy to qualify for Partnership it must have age-appropriate inflation which varies by state. Most but not all states offer Partnership policies.
What consumers don’t like about these products is that premiums can increase. Though the market has been very stable for these products sold after 2014.
More about asset-based long-term care insurance products is coming next week.
No matter which funding option you go with, we are here to help!
See the previous blog posts in this series:
