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Long-term Care and also the Liquidity Trap

Next year, the average cost for any room in the skilled nursing facility be more pricey than $70,000 for any semi-private "shared" room plus a private room be more pricey than $90,000. Which was the cost first year of care and for just one single individual or spouse. Since most need maintain Three to four years (or longer) and yes it becomes painfully no surprise that seniors are really concerned with the long run tariff of care.

Using this type of financial liability, middle class families are at greatest risk, but even families with significant assets will get themselves inside a lasting care liquidity trap. It isn't dependent on whether high value families can afford to fund these expensive services, because clearly they are able to. It's really down to creating the liquidity required to buy these services inside a tax-efficient manner.

Families with significant assets typically possess a diversified portfolios of securities, government and company bonds, annuities, property, or other assets. Unfortunately these assets may be illiquid or selling them in an inopportune time can lead to substantial investment losses. Because of this, a long term care event might cause an important liquidity trap. Paying taxes on capital gains or withdrawals from qualified retirement accounts to pay for care only adds insult to injury. For this reason, long term care insurance still makes a lot of sense for people who have enough money to cover care out of their own pocket.

It's with justification that financial advisors sell life insurance with their clients to purchase estate taxes; it's not since they cannot afford to spend the required taxes, it's to provide their estates with liquidity. LTC insurance provides a similar liquidity benefit and, like insurance coverage, supplies a variety of tax advantages.

Firstly, the insurance policy premiums could possibly be deductible on individual taxation statements. Secondly, qualified [http://www.pflegeversicherung-vergleichen-lohnt.de Private Pflegeversicherung] that would normally be paid off their reasons for income are reimbursed tax-free. For high income families, this could result in 1000s of dollars in savings. Furthermore, if government policy continues to favor future tax increases on the nations' wealthiest families, these tax advantages could become much more valuable in the longer term.

Today, those with significant assets can find linked-benefit policies that combine LTC insurance with life insurance. This original plan design supplies a long term care benefit together with premium liquidity. Several of these hybrid policies can be cancelled for the full refund whenever you want as well as any reason and if the insurance policy holder dies before employing their policy benefits, the complete premium is repaid for their beneficiaries through a guaranteed death benefit. If you don't utilize it, you don't lose it.

For top net worth families, a linked-benefit LTC plan offers the liquidity necessary for future care and protects their investment principle concurrently.