Financial Advisor

Long-Term Care Insurance

Retirement can be a time filled with enjoyment and relaxation. However, due to the large amount of variables in our lives, there can be great anxiety in this transition. Of course, an individual’s financial condition is an important component in the process. A financial plan can help identify areas of concern and often one of the larger obstacles is long term care.

Long term care (LTC) involves services needed to assist in everyday tasks that a person is no longer able to perform on their own. For example, eating, bathing, dressing, housework, transportation, shopping are some of the areas of requiring LTC. This could be caused by illness, injury, disability or by normal aging.

Here are some statistics surrounding LTC.

  • 52% people turning age 65 will need some type of long-term care services in their lifetimes.
  • 2 ½ years is the average length of time that someone needs long term care.
  • $97,455 is the estimated average annual cost of a private room at a skilled care facility.
  • $341,840 is the estimated cost of care for a patient with dementia.

The silver lining in this potentially financial dark cloud is that there are some options. The insurance industry offers some products to reimburse the costs of LTC expenses. While keeping in mind that generous insurance underwriters usually have brief careers, there are some insurance policies can help with LTC issues.

Depending on the individuals circumstances, combining life insurance with LTC coverage could be a solution. The advantage of combining these two types of insurance is that all premium dollars will be used for either death benefit or LTC coverage. In contrast, a LTC only policy will not pay any benefits if LTC is never needed.

Within the option of combining life and LTC insurance, there are structures that leverage premiums toward LTC and less emphasis on a death benefit. Other policy types have a more balanced benefit profile with a defined death benefit which is reduced if LTC expenses need to be paid. The point is that solutions can be fitted to an individual’s needs, budget, and time frame.

When considering LTC coverage, there are incentives for acting sooner rather than later. Premiums will be lower and coverage will be easier to obtain. According to a Morningstar article (August 20, 2018), 13.9% of applicants in the 50 – 59 years old bracket are denied coverage (for various reasons) This number more than triples to 44.8% if the applicant is between 70 and 79 years old. Obviously, addressing this at a younger age is easier and cheaper.

Many share the goal of getting the most out of our “golden years”. Proper forethought, including a comprehensive financial plan, can help. Unfortunately, unexpected expenses associated with something like a nursing home stay can throw a wrench into these plans. Fortunately, there are solutions which help prepare for such occurrences. Please contact us if you want to learn more about LTC coverage.