Thursday, July 12, 2018

How Traditional and Asset-Based LTC Plans Differ

The owner of KK&B Financial Services, Brad Liebe helps seniors reach their retirement goals using numerous financial services. Through his business, Brad Liebe offers such products as asset-based and traditional long-term care (LTC) insurance.

Traditional LTC policies are simpler than asset-based LTC policies. They work like regular car or homeowner insurance in that the premium disappears if you don’t need the insurance. These types of policies do not build any value that can be passed down to heirs unless policyholders set up a return of premium feature when creating the LTC policy. This feature provides heirs with some value if the policy is never used.

Also known as hybrid policies, an asset-based LTC policy combines long term care support with a death benefit for heirs. These types of policies are usually more expensive than traditional LTC policies and have an up-front fee of from $50,000 to $100,000 per person. In most cases, funds for an asset-based LTC plan are typically taken from an existing asset, so it’s recommended that people have a net-worth of at least $750,000 to ensure they have enough assets to cover the cost of the plan.

Once an asset-based LTC is set up, policyholders can enjoy premiums that never increase, along with a death benefit that is paid out to a beneficiary when the policyholder passes. They can also cancel their policy and get their premium returned to them.