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Long Term Care as well as the Liquidity Trap

In 2011, the common cost for the room in the skilled nursing facility cost more than $70,000 for any semi-private "shared" room and a private room cost more than $90,000. That's the charge for starters year of care and then for one individual or spouse. Considering that most will need take care of Three or four years (or longer) also it becomes painfully no surprise that seniors are very interested in the future tariff of care.

With this particular type of financial liability, middle class families are at greatest risk, but even families with significant assets will find themselves in a long lasting care liquidity trap. It's not dependent on whether high net worth families are able to fund these expensive services, because clearly they are able to. It comes down to creating the liquidity had to purchase these types of services in a tax-efficient manner.

Families with significant assets typically own a diversified portfolios of securities, government and corporate bonds, annuities, real estate, and other assets. Unfortunately these assets are generally illiquid or selling them in an inopportune time might lead to substantial investment losses. Consequently, a lasting care event can cause a substantial liquidity trap. Paying taxes on capital gains or withdrawals from qualified retirement accounts to cover care only adds insult to injury. Because of this, long lasting care insurance still makes a lots of sense for even those that can afford to pay for care out of their own pocket.

It's with justification that financial advisors sell term life insurance with their clients to fund estate taxes; it is not since they can't afford to spend the required taxes, it's to provide their estates with liquidity. LTC insurance offers a similar liquidity benefit and, like life insurance coverage, gives a quantity of tax advantages.

Firstly, the insurance policy premiums may be deductible on individual tax statements. Secondly, qualified Click here that will normally be paid from other causes of income are reimbursed tax-free. For prime income families, this may lead to lots of money in savings. Furthermore, if government policy is constantly on the favor future tax increases for the nations' wealthiest families, these tax advantages can become more attractive the longer term.

Today, those that have significant assets can get linked-benefit policies that combine LTC insurance with term life insurance. This original plan design gives a long-term care benefit in addition to premium liquidity. Several hybrid policies can be cancelled for any money back refund at any time as well as whatever reason of course, if a policy holder dies before employing their policy benefits, the entire premium is paid back with their beneficiaries via a guaranteed death benefit. If you do not use it, you don't lose it.

For prime net worth families, a linked-benefit LTC plan supplies the liquidity essential for future care and protects their investment principle as well.