As your adult children continue to age, it’s easy to become more aware of the passage of time. Even when they start having kids of their own, it’s hard not to see them as the baby you welcomed to the world. So, you never stop parenting. You want to pass along your wisdom and knowledge and pass along a legacy. One way to do all that is with Long Term Care Insurance (LTCI). In fact, LTCI for your adult children can be a great way to provide a lasting gift for your family.
That’s especially true because, if you have adult children, you’re probably old enough to be thinking about your own long term care costs–and the best way to handle them.
The Perfect Gift for Adult Children
If you have adult children, you may want to do something to ensure that they’re taken care of long after you’re gone. You want them to have a good, full life–no matter what happens to you. As a result, many parents consider leaving their children a monetary gift.
But there are some ways in which Long Term Care Insurance for your children may actually be superior to simple cash:
- LTCI can help ensure your children are cared for medically–even if they are unmarried or have no support system.
- Roughly 70% of those 60 and over will need long term care, so the chances that your adult child will need LTCI in the future are quite high.
- When used, LTCI can protect your adult child from increasingly high healthcare and caregiver costs. This means you can help keep your adult children cared for–and solvent.
Long Term Care Insurance can help your adult child cover future medical expenses, such as home care, assisted living facility, memory care and a stay at a nursing facility. These are usually medical events that happen later in life–but not exclusively so.
Securing Long Term Care Insurance for your adult children starts to make more sense than a monetary gift. That’s especially true because gifts larger than $16,000 are taxable–and those tax penalties can be quite stiff. LTCI policies, however, tend to be much more forgiving–meaning a larger portion of your funds go toward ensuring your legacy and the health and happiness of your children.
How Do You Shop for LTCI for Your Adult Kids?
If you’re going to purchase Long Term Care Insurance for your adult children, it’s a good idea to spend some time thinking through the best policy choice you can make. For many, that means it might be a good idea to talk to your children. Find out what they’re worried about and what needs they might have in the future.
When most people think about insurance, they typically imagine a standard never-ending monthly payment, kind of like with health insurance or car insurance. And those LTCI plans certainly exist–in fact, they’re a good fit for a wide variety of people.
But if you’re purchasing LTCI for your adult children, you may want to avoid paying lifetime continuing premiums. Instead, focus on plans you can pay off in full.
LTCI for your Adult Kids: Plan Options
If you’re shopping for LTCI, you’ll have several options:
- A plan you can pay off with one lump sum: These plans tend to be very cost effective–but incur a higher one-time cost. For robust LTCI benefits, a one-time lump sum payment can provide you with excellent coverage when needed.
- A plan with set limits: Other available plans will have a finite contribution. You might make payments for five or ten years, for example–after which time the policy will continue to be active and in-force, but will not require any further premium payments, and be considered paid up.
- Hybrid plans: Many of these paid-in-full options are also available in so-called hybrid plan formats. With a hybrid plan, you combine life insurance with a LTCI rider. This has the added benefit of being able to name a beneficiary of your choice.
It’s important to discuss these options with your adult child. And if you need further help deciphering what type of plan to purchase, you can talk to a financial planner or long term care planning specialist.
Make a Plan That Fits Your Needs
Long term care planners can also help you select the best possible policies for your situation. The team at Gordon Associates Long Term Care Planning have helped parents of adult children go through this process to find excellent solutions to protect their families future care needs.
During conversations with these experts, emphasize that you don’t want your adult child to take over the payments at any point. Instead, you want the LTCI policy to be paid in full so that it can outlast you. The last thing you want is to pay the premium for years only to have the policy lapse once you’re no longer able to make payments.
Because there is a financial element to buying LTCI for your adult children, you’ll also likely want to discuss your plans with your accountant or a tax expert. That way both you and your children can be prepared for any tax benefits or implications that might arise.
And keep in mind, the younger and healthier you are when applying for LTCI, the easier it will be to obtain coverage, and with lower premiums.
We’re here to answer all of your questions! Please watch for our next blog, “What’s New With Hybrid Long Term Care Insurance Plans?” These plans are more and more popular for their flexibility and certainty that all of the benefits will be used.
To help determine if long-term care (LTC) insurance is right for you, we are offering a FREE informational guide. This is a comprehensive booklet that will answer many of your questions about LTC and assist you with your health care planning.
To help determine if long-term care (LTC) insurance is right for you, we are offering a FREE informational guide. This is a comprehensive booklet that will answer many of your questions about tax breaks and incentives for LTCI for federal and state taxes.