Mullen and Iannarone, P.C.
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families of Suffolk County since 1972

What to know before buying long-term care protection

New York residents and others are generally capable of calculating their monthly expenses. Having this skill may make it easier to plan for how much one will need in retirement. However, it is also important to plan for things like inflation, which may lead to higher costs over time. Paying more for goods and services may be increasingly difficult while living on a fixed income in retirement.

It is important to note that some expenses will increase faster than others. While the overall inflation rate in the United States was 1.9 percent between 2012 and 2016, health care costs are set to rise by 5.4 percent per year. Retirees will also need to account for long-term care costs in addition to current expenses. Some may choose to simply pay out-of-pocket or liquidate assets to cover those costs.

Those who don't want to put their assets at risk may benefit from long-term care insurance. However, this can be costly, and premiums aren't refunded if care is never sought. Combining a long-term policy with a life insurance policy may be ideal because a death benefit may be paid out if long-term care benefits aren't used while alive. The only potential downside is that such a policy generally requires a large upfront payment.

Buying a long-term care policy may provide asset protection in the event such care is needed. For those who are interested, it may be ideal to discuss benefits of a long-term care policy or hybrid policies with a financial adviser. An attorney may be able to help an individual incorporate insurance or other benefits that may be paid out after death into an estate plan. This may make it easier to direct a death benefit to the right place.

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