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“Will I run out of money before I die?”
George Gagliardi gets that question all the time from clients. A certified financial planner in Lexington, Mass., Gagliardi rarely dishes out a simple answer. Instead, he explores creative solutions to preserve retirees’ funds.
Individuals in their 50s and 60s often expect Gagliardi to recommend long-term-care insurance. They may assume it’s a prudent way to protect assets if their health declines and they rack up steep bills for an assisted-living facility or in-home aides.
But Gagliardi isn’t a fan of long-term-care coverage. He argues that soaring premiums make the product unaffordable for many pre-retirees and retirees.
In 2016, most federal government employees and retirees faced an 83% rate hike to renew their policies. Civilian policyholders have confronted hefty increases as well.
“The cost of a long-term-care policy can significantly impact one’s lifestyle in retirement, regardless of whether they ever have to go into long-term care,” Gagliardi said.
He favors two alternatives. For some clients, he advises they buy hybrid long-term-care policies that combine traditional long-term-care coverage with cash-value life insurance that doubles as a savings and investment vehicle.
Typically, these policies allow the policyholder to tap funds for long-term care — and the insurer pays for continuing care when those funds run out. If the policyholder dies without needing long-term care, designated heirs get the death benefit.
“I consider a hybrid an easier sell [than long-term-care insurance] and I’ve suggested it to a few people,” Gagliardi said. “But it will take a chunk of your resources…