With your third child now finished with college and all three seemingly firmly ensconced in the world of work, the two of you have begun to focus your attention on your own future financial security. In your early 40s with full-time careers, retirement is probably at least a couple of decades away. Up until now, your estate planning has been focused around guaranteeing that your daughter and sons would all be able to enter the professional workforce unencumbered by debt. You each had substantial term life insurance policies to be sure that plan was carried out no matter what.
The emphasis moving forward is on maintaining your own financial independence for life, without you ever becoming a burden on your children. At this point, long term care insurance, you’ve realized, is more important than the life insurance, and you’ve begun exploring different policies. The costs are somewhat daunting, particularly since you have been offered a policy rider that increases the coverage to keep up with inflation. When you expressed concerns about keeping up with the premiums once you’ve both retired, you learned that some policies would allow you to achieve “paid up” status, which f course would increase the financial commitment substantially. A related aspect of your planning is your home, where you plan to remain in retirement. Your mortgage should be fully retired by that time, which would free up some dollars towards continuing to fund the long term care policies.
As you shift your attention away from helping your children towards your own future living needs and protection, you are right in realizing that your home is an asset that should be considered along with your retirement accounts. One possible course of action would be to set up your Long Term Care policies now (while you have greater probability of qualifying), but with longer “elimination periods” (meaning benefits might begin months following a claim rather than immediately), leaving off the “inflation riders”, thereby keeping the premium costs in a much more affordable range. Then, at your age 62, you can set up a reverse mortgage, using your housing wealth, on an as-needed basis, to fund any long term care needs that exceed the policies’ coverage.
In this now-and-later plan, you set long term care protection in place now, but allow the equity you’re building in your own home to replace the costly policy “riders” – later.
A reverse mortgage can replace riders on long term care insurance.
Home Equity Retirement Specialist
NMLS # 1595194
Serving the State of Indiana
p (317) 644-2595 c (765) 516-0130
2169 East Rutland Lane, Martinsville, IN 46151
Corporate NMLS #1025894