“What is long-term care insurance?”
Long-term care insurance offers protection for your family in the event of needed care over an extended period of years.
What are my chances of needing care?
From a statistical point of view, your chances of needing care are quite high. At age 65, a person has a 70% chance of needing some type of extended care. Based on numerous surveys, the cost of extended care is substantial. However, if you are like most healthy individuals, you’ll likely believe that it’s not going to happen to you. No argument. You may be absolutely right, but do you understand that if you did need care, it would likely cause irreversible damage to your family’s finances and overall health? Take a moment to read more about those consequences …
What are the consequences to my family if I need care?
There are two sets of irreversible consequences to providing care for you. By definition, care would become all-consuming, meaning those you promised to take care of would have no choice but to put there lives aside to take care of you. The result? Taking care of you would likely take a serious emotional and physical toll on your spouse and other loved ones. If you have children, it is very likely one, likely a daughter, will have to set aside the life you and your spouse worked so hard to prepare them for.
If there are siblings, it is almost a certainly that there will be serious issues between those who help and those who do not. The result is that, should you ever need care, it will most likely not bring your family together, but tear them apart causing irreversible damages.
Paying for care will require a reallocation of your income. If you are like most successful people, that income is already committed to expenses, few of which are discretionary. Paying for care disrupts your ability to keep up with your commitments because income has to be diverted. Asking income to do both at the same time is, in effect, double counting it.
If you have substantial assets, you likely believe you can pay for care. No doubt that is the case. However, have you considered that paying for care requires an invasion of capital? Your retirement portfolio is, in effect, a capital asset that has one function—generate predictable streams of income. Using capital to pay for care disrupts plans to reduce or eliminate taxes or wait out a down market. Perhaps most importantly, every dollar used to pay for care is one less dollar available to generate income.
Why should I consider buying long-term care insurance?
The objection most often voiced, is that the premiums would be wasted if care were not needed. That is true if you look at long-term care as a risk to you. The answer may be quite different if you think of long-term care as a consequence to those you love which are discussed in “What are the consequences to my family if I need care?”
Long-term care insurance is no different than life insurance; it doesn’t protect you, it protects those you invited into your life and promised to take care of. Owning this critical product, in many ways, is a second gift to your children—the first was bringing them into this world. The second, making sure that they do not have to put aside their lives to take care of you.
What types of long term care insurance policies are there?
Policies are generally divided into two types, “traditional stand-alone” and “asset-based.”
Traditional long-term care insurance pays for your care through benefits that are selected by you. Those benefits are in a “pool” and can be used for four types of care:
- Home Care
- Adult Daycare
- Assisted Living
- Skilled Nursing Home
The size of the pool depends on two factors—the daily benefit amount and the number of years for which you choose coverage. For example a $200 a day benefit for 3 years would give you approximately $211,000 in benefits. If you only used $100 a day the benefit period would expand to 6 years.
Asset-based long-term care insurance policies are also called “hybrid policies.” There is an underlying asset, which in this case is a life insurance policy. You pay a premium, either up front or over a period of years, and in exchange you get a death benefit that can also be used to pay for care. If care is never needed, your family gets the death benefit. Many carriers will put a multiplier on the death benefit. For example, a $100,000 death benefit could be worth over $300,000 in long-term care benefits.
Is it better to buy direct or from an agent?
Long-term care insurance language and coverage is very complicated. It is strongly recommended that you work with insurance professionals who have experience in putting long-term care insurance in perspective. Whatever policy you choose should be part of an overall plan to protect the emotional, physical and financial wellbeing of those you love.
“LTC in the Workplace”
What is it costing your company by not providing coverage?
- The average caregiver will lose over $600,000 in wages.1
- 70% – 80% of all long-term care is provided informally by family or friends.2
- 50 million people provide care for a chronically ill, disabled or aged family member per year.3 • Over 7 million Americans are long distance caregivers.4
Consider the impact that employee caregiving has on your bottom line:
Employers bear caregiving-related financial costs estimated at over $30 Billion/year
- Financial, emotional and physical well-being of caregivers
- Employee work performance suffers
Get Prepared for Your Aging Workforce!
Why Should You Care About Caregivers in Your Company?
Employers who opt for a group LTC plan will be rewarded by higher rates of employee productivity, retention & satisfaction!
1 http://www.metlife.com/assets/cao/mmi/publications/studies/2010/mmi-working-caregivers-employers-health-care-costs.pdf 2 http://www.reptruitt.com/Display/SiteFiles/147/OtherDocuments/HB1713/HB1713_Lost_Productivity.pdf