7. Annuities with long-term care riders

Next on our list of alternatives to long-term care insurance is taking out an annuity with a long-term care ride. This is a great option for people who aren’t eligible for traditional long-term care insurances. You can use the money invested in an annuity with a long-term care rided without paying taxes on it and cover the long-term care expenses as defined under the contract.

This option provides you with a stream of monthly payments you can use specifically to pay for the care you need. Medical underwriting for this alternative is less stringent than traditional long-term care insurance, and you have greater freedom in how you use the care benefits.

If long-term care proves to be unnecessary, you have the option to redeem the accumulated value of the annuity. Upon the death of the annuity owner, the funds pass to the heirs, minus any withdrawals for long-term care.

Yet, annuities need to be bought upfront, which means you need to make large payments to get a monthly cash flow for a defined period. These types of annuities have minimum up-front premiums of $55,000, and the sum is normally locked in for five to 10 years.

If you liked our article on alternatives to long-term care insurance, you may also want to read 5 Medicare Myths That May Destroy Your Retirement.