When to Buy LTC
LTC Insurance is Too Expensive!
Lately I have seen clients shown proposals to purchase Long-Term Care insurance with premiums exceeding $10,000 a year for a couple. This is ridiculously expensive for most couples in their fifties, and is probably because the insurance amounts are way too large to be appropriate.
Some insurance agents who “dabble” in LTC insurance products think that everyone needs enough insurance to cover the entire bill. Perhaps they themselves have zero deductible car insurance, which makes no sense either.
If we have a car accident, most of us have some deductible that we will pay before the insurance pays the rest. The larger the deductible, the lower the insurance premium. With most car accidents, our lifestyle does not drastically change, but when LTC is needed, it does.
If one of a couple needs LTC, they are probably not driving anymore. Thus fewer cars, less motorcycles, boats, campers, snowmobiles, ATV’s, etc. will be needed. There will be less trips to Branson, Disney World, cruises, even less going out to dinner when one has a difficult time going anywhere.
Professionals who specialize in LTC planning take these things into consideration. We try to help our clients predict how much of their monthly income is actually required to pay the basic bills, and with less toys and travel – how much of the bill for LTC they can pay out of pocket.
In addition to monthly cash flow, many people can also contribute the interest their savings earn, without touching the principal. Often, the total between available cash flow and monthly interest will cover a significant portion of LTC costs. Only the shortfall needs to come from LTC insurance.
Here is an example for a 65 year old couple. They want to be able to pay for home care and assisted living facility care without using up their life savings. If they do not need to support 2 cars, the extra Corvette “summer car”, the boat, and they understand that when one cannot travel, that expense drops to zero as well, they can pay the majority of the cost of home or assisted living facility care.
Many people plan for just those costs as very few people today need the care of a nursing home, especially if they can afford their home or assisted living care.
In their case it is determined that an additional $2000 a month from LTC insurance will suffice. At age 65 for each, and both in good health, they can purchase that coverage with a 10 year benefit when care is needed, including an automatic 5% compound inflation rider on the monthly benefit for less than $2000 a year each.
With the automatic, built in 5% compound inflation on the benefits payable, by age 85, a 10 year length of claim can give them over $850,000 from the LTC insurance to pay for their care.
Let’s review, at age 65 they purchase LTC insurance that will give them over $850,000 to pay for care over 10 years starting if care is needed at 85, for $1900 a year. Is a premiumk of less than $2000 a year expensive for that?
If you have been shown sky high premiums for LTC insurance, you need to shop around before you buy. Talk to someone who has over 23 years experience in planning for LTC, and can help you size coverage appropriately. Just give us a call at TheLongTermCareGuy.com at (920) 884-3030 or (800) 219-9203 and lets investigate. But don’t wait until your health fails, becasue then it may be too late, for you.
Where’s The Disconnect
This post, in it’s entirety, is reprinted from a chapter in the book “Surviving Alzheimer’s with Friends, Facebook, and a Really Big Glass of Wine”, written by my very good friend Honey Leveen, a first rate Long-Term Care insurance agent in Houston, TX
“Where’s the Disconnect?” by Honey Leveen, The Queen, by Self-Proclamation, of Long-Term Care Insurance
Insurance disclaimer: The following is based on the author’s personal experiences and opinions.
Much of the legacy we leave may be measured by how honestly we’ve dealt with life’s most painful truths. Often, such truths are the most obvious, yet hardest to see clearly.
I’ve specialized in long-term care insurance (LTCi) since 1990. That’s a long time. I’ve seen a few hundred of my nearly 3,000 clients collect from policies I’ve sold them. This is just the tip of the iceberg, however; many more will need to collect from their LTCi as time goes on.
I see scenarios just like Dayna’s [as described in Surviving Alzheimer’s] play out again and again. For different reasons, when a parent needs LTC, family members who’ve always gotten along well may find themselves at odds with each other. It is exactly as Dayna describes. The absence of sufficient, readily available money to swiftly access long-term care (LTC) aggravates an already highly stressful situation.
People who own LTCi also commonly suffer familial dysfunction similar to Dayna’s. What makes things so different for them is that their LTCi policies pay out significant, meaningful amounts of money when LTC is needed. This is often a huge game changer. LTCi tends to subdue the emotional discord Dayna describes. Relationships don’t suffer as much, and outcomes are better. The money people collect from LTCi provides them with dignity, choices, access, and options they would not have otherwise had.
Sadly, most of us still do not own LTCi. Sadder still, it is too often well-educated people with good incomes and a whole lot to lose who choose to be unprepared for LTC.
Such people come up with what they think are fabulous excuses to avoid discussing what might happen to them at the end of their lives. There seems to be a disconnect between our intellect and our emotions when it comes to LTC planning.
According to www.longtermcare.gov and other reputable sources, at age 65, there’s a 70% chance of needing LTC. These odds go up with each year we age. Visit Genworth’s Cost of Care Calculator (find it in the Resources area of www.honeyleveen.com) to see just how expensive LTC is in your locale.
Most LTC in the US is provided on an unpaid basis, disproportionately by women, who often have to sacrifice their careers, savings, and relationships to provide care.* LTC already costs American families dearly, yet the worst of this crisis is yet to come.
As former First Lady Rosalynn Carter said, “There are only four kinds of people in this world: those who have been caregivers, those who are caregivers, those who will be caregivers, and those who will need caregivers.”
Here are some simple responses to major misconceptions about LTC and LTCi. More complex answers are found on www.honeyleveen.com or by calling me, at no obligation:
LTCi is too expensive. Not true. What may be expensive is needing LTC for anything but a short time and not owning LTCi. Policyholders usually collect back all premiums they’ve paid over the life of their policy in a few short months. Premiums are customized for each person and can be made to fit into almost anyone’s budget. *
The government pays for LTC. The type of LTC the government pays for is not what you would freely choose. *
Medicare covers LTC. No it doesn’t! Medicare covers acute medical problems and a restrictive, conditional amount of home or in-patient rehabilitative care that most people don’t qualify for.*
The LTCi industry is threatened. It’s true that the number of carriers selling LTCi has shrunk; there are valid reasons.* Policyholders are not in danger.* LTCi carriers remain staunchly committed to the market. They realize the LTC crisis and oncoming Senior Tsunami isn’t going away any time soon, and are in it for the long run.*
LTCi only pays for nursing homes. The opposite is true. The great majority of LTCi policies pay comprehensively, for care at home, in adult day care, assisted living, and nursing homes. They enable you to increase the odds you will not need LTC provided in a nursing home.*
Here are some of many silly excuses smart people give me to avoid conversing about LTCi while they’re healthy and can find reasonable premiums:
My wife will take care of me. Really? Your wife will be eager and physically capable of helping you bathe and dress, for example? You don’t mind the thought of her last memories being about the physical, emotional and financial burdens of caring for you?
That won’t happen to me. Really?
My kids will take care of me. Really?
I’ll kill myself.
I can’t afford LTCi. Many people claim LTCi is too expensive, despite the fact that we tailor LTCi premiums to fit into most people’s budgets. Situations like this one happen frequently: an acquaintance tells me she can’t afford LTCi premiums. This person’s mother needed LTC for an extended length of time, at great sacrifice to the family. A week later this person announces she is making a two week trip to Mt. Everest Base Camp/African photo safari/Tahiti or another exotic locale, or is buying a top-of-the-line car/kayak/audio equipment, etc. She has the money to do that but can’t afford LTC premiums. Where’s the disconnect?
Here’s another common scenario: I get incoming calls with Caller ID stating: “METHODIST HOSP RE-HAB”. The caller is the daughter or son of someone who’s just broken their hip or suffered a stroke. They ask me to come sell their parent LTCi. I have the unpleasant task of trying to tactfully explain that their parent is uninsurable. Sometimes the child is incensed by this news. I suggest the child is of ideal age to find reasonably priced LTCi for themselves; this might be a wise idea if they want to assure a similar scenario doesn’t play out when at the end of their lives. The child is normally not interested. The reason is that the family is in the worst kind of turmoil, duress, and dysfunction. They are scurrying around trying to cobble together LTC for their parent, and there isn’t sufficient, readily accessible money to pay for it. This is the scenario Dayna and I urge you to avoid by doing reasonable, responsible LTC planning, now.
What all of my LTCi clients have in common, regardless of their incomes, is the ability to honestly, openly discuss LTC in advance. Most of my clients have had firsthand experiences similar to Dayna’s. They’ve learned from them, and taken action to avoid the consequences of not being prepared for their own long-term care.
If you need to investigate whether LTC insurance is appropriate for you – or not, give www.TheLongTermCareGuy.com a call at (920) 884-3030 and lets see.
60% of Adults Worry About Paying For Long-Term Care
A recent study claims that 60% of adults worry about how they will pay for Long-Term Care (LTC), and 10% said it was their top concern. While two-thirds of consumers agree that most people need LTC insurance, only 16% own any.
Most people have never investigated LTC insurance and simply “think” it is too expensive. Many insurance agents who dabble in this product feed that myth by suggesting policies that are way too large for the consumer’s needs.
When someone needs LTC services, their lifestyle changes drastically. There may not be as many vehicles in the household when someone can no longer drive. There will be less cruises, trips to Branson, MO, golf, boating, camping, excursions, etc. when these things become difficult. There may even be less dining out.
Thus much of the money that was spent on fun things and travel can be redirected to help pay for needed LTC services. Savings can also help, but not by spending the savings, but rather by using the interest those savings generate to also help pay for services needed. Thus, only the shortfall needs to come from some other source, like LTC insurance.
It is also necessary to consider where you will be living, geographically. LTC costs vary significantly across our nation and this must be taken into consideration. We find that most people are pleasantly surprised that after investigating such insurance with an expert who understands how and where LTC services are delivered, and can choose among many carriers for the best fit based on your age and health, that the coverage is nowhere near as expensive as previously feared.
Let me give you an example: Lets take a 65 year old person who is only now investigating LTC insurance. Assuming decent health (typically blood pressure and cholesterol medications have no effect on pricing) a 65 year old could purchase over $850,000 of coverage for less than $2000 per year premium.
It matters not if this is a male of female, as not all companies charge females 50% to 75% more than males. The coverage suggested here is a 10 year benefit of $70/day, with a 90 day deductible and includes an automatic, built in 5% compound inflation factor on the $70/day benefit that will double that benefit every 15 years. The entire benefit is paid out for each day care is needed, even if in excess of the cost of services. The benefit is good in any setting, home or facility.
$70 per day, plus a Social Security check will often be sufficient to cover care in your own home, adult day care, or care in an assisted living facility. Many people do not choose to purchase a policy large enough to cover the more expensive nursing home, since less and less care is done there anymore.
If the 65 year old pays that premium for 20 years, they will have paid less than $40,000 in income tax deductible premiums. If they need care at age 85, they can collect at a starting rate of $185/day. Over 10 years of collecting they will receive $852,000 in benefits to use in paying for LTC.
Note that the benefit increases by 5% compounded while collecting to keep up with the increasing costs of care. This option is vital and is included in this example.
Less than $40,000 in tax deductible premiums to get over $850,000 tax free later to pay for LTC – is that as expensive as you thought?
If you are going to investigate this, investigate with an expert in LTC financing. At TheLongTermCareGuy.com, we have been doing nothing but the financing of LTC for 23 years now. Give us a call at (920) 884-3030 or (800) 219-9203 and lets discuss your situation.
Sandwich Generation Example
The partner is writing today’s blog: Right from the heart of a long term care dilemma.
Mom and I live 125 miles apart. I work full time, and have adult “step-children” at home, as well as a new “spouse”, AND am the care giver to 83 year old mom: A classic case of “sandwich” generation.
Hindsight is a wonderful tool – it makes us look at what should have been while sorting out the realities of where we are. In hindsight mom should have purchased Long Term Care Insurance 20 years ago. She could have done so when she was still teaching. Mom is of the genre that doesn’t believe in Insurance in general. Unfortunately no one sat with mom to have the discussion of where do you want care, who will help you with care, and how will you pay for your care (and in mom’s case, still leave something to her family as her legacy).
We are at the cross roads of what do we do with mom? I am the in-state sibling. The out of state sibling has washed his hands of mom’s care because this sib is too busy building his career.
Of course as sibling things go, my career seems to be forgotten in this equation: A common issue for women in the sandwich situation.
Mom, at 83 has been quite active, independent, spunky, and generally able to care for herself for over 40 years. First, as a single parent in the 1960’s (when single moms were frowned upon), then as a single parent seeing to it both her children went to college and got masters degrees. And then as a champion ballroom dancer in her 70’s.
Mobility issues and vision deterioration have now put this spunky, sharp-witted lady in the dilemma of moving to a new community to be closer to her primary care giver; to change doctors, hair salons, fitness trainer, church, restaurants, etc. At 83 this is not an easy task. Moving to a Senior Community 125 miles away is a huge leap for this person who likes the security and continuity of her condo; to say nothing of having to give up her best friend – Kitty Cat. (Author note – Kitty cat will be coming to live in our zoo with existing cat and dog).
Had mom considered Long Term Care Insurance when she had the chance, she would have several more options for where she could get care. As it is, we at the Long Term Care Guy, looked at mom’s financial situation, and because she has been a conservative saver, she can afford a Senior community. BUT if her health and mental acuity decline, she will be faced with another move, to a facility that will take Medicaid.
Being a long distance caregiver is tough: Emotionally draining, physically exhausting and frustrating. Add to that the demands of career and family and the days are not long enough.
So to close, please consider Long Term Care Insurance while you are healthy and able to get it. This will provide you with numerous options for where you will get care, who will give you the care and how the care will be paid for.
Discrimination
Yes, it is legal, despite what an article in the USA Today newspaper stated last week. Long-Term Care (LTC) facilities can and do discriminate on whom they allow in.
The problem is that many people do not plan for LTC costs. The insurance that pays for LTC is not cheap, but is actually quite reasonable compared to what it will pay out for your care when needed. The problem is that many people will put more time and effort into finding a way to get onto Medicaid (welfare) than in finding out how they might be able to pay for their care and have choices.
Medicaid is a fall back for people who run out of money paying for their LTC. Unfortunately, it pays less for your care than a person would pay out of pocket, or with insurance. The facilities can actually lose money on this low reimbursement.
Is it possible to lose money on every customer, and make it up on volume?
Of course not! Nobody, including the government will force facilities to accept a loss on every customer and go out of business. Thus the facilities need to keep a mix of those paying for their care to offset the loss on the Medicaid recipients.
A good friend is currently trying to get her mother into a facility in the Midwest. Most of them are asking about her mother’s finances. If she has enough to pay for a number of years, they will accept her. If soon to be on Medicaid, they will not. Others will accept her only if she signs that when she runs out of money and turns to Medicaid, she must leave. How difficult will it be for her to find a facility to accept her then, when they will be losing money on her from day one? It’s good to be charitable, but if you cannot keep your doors open, you will help nobody.
Bear in mind that with the baby boomers turning 65 at a rate of 10,000 a day, the government does not have the funds to handle all the Medicaid LTC either. Medicaid LTC is passing both Social Security AND Medicare as a government expense that is unaffordable.
So, what is the solution to this problem? Have you even investigated LTC insurance for yourself? Why not? Are you hoping that if you don’t talk about it, then perhaps you will never need care? Really? That superstitious?
Most people are surprised to learn that they need less of the insurance than they initially thought. They do not take into account that when one of a couple needs care, there may be no more cruises, trips to Branson, Washington DC, the Florida Keys, etc. No need for 2 (or 3) vehicles if only one can drive, same for the boat, camper, motorcycle. Thus a good portion of spendable income can be redirected towards the cost of care when care is needed.
If you do not want to decimate your life’s savings, you can still use the interest they generate for care, without touching the principal. Then, only the remainder needs to come from LTC insurance.
Many people do not purchase enough insurance to cover a nursing home, since only about 20% of care is done there. If you can afford to cover home care and the wonderful assisted living facilities with a small policy, you have a very good chance of never seeing the inside of a nursing home. Like your homeowners insurance, some of you do not have flood coverage, thinking the risk is too small to insure.
Lastly, the longer you wait to investigate this, the more it will cost. Not just because you get older, but because this insurance has built in inflation to keep up with increasing care costs. Waiting is like saving up to pay cash for your first house. Get it now and inflation will be working for you, causing your policy to automatically get larger every year.
So, wait no more. Give us a call at (920) 884-3030 and schedule a time to do some investigation. You might be pleasantly surprised. The longer you wait, the more likely something will happen, and then you cannot buy it ever again.
Hiring Help For Mom
Reprinted from the Washington Post Carolyn Hax column
On Abruptly Facing An Elderly Relative’s Need For Care
I sometimes supplement my income by senior-sitting those in need of temporary help. Recently, a family offered me a position to live 24/7 in their mother’s home as her aide, caregiver, housekeeper, cook, laundress, hairdresser, chauffeur, med-tech, and personal care provider. The “terms” (their word) were: free room and board, two full weekends off each month, most holidays off and a “stipend” (their word) of $100 a week.
Essentially, they want the Care Fairy to come see to their mother and the house, and will give the Care Fairy a weekly allowance for the privilege. This family is desperate, of course. They have slipped right on over into the fantasy world between Denial and Magical Thinking, unable to grasp the situation upon them. So, I did not overreact when I said no thank you. I was polite, but they were stupefied that I was not interested.
Adults in the sandwich generation: This is your future. The time to talk about it is now, not the day after “something happens”. You might not have a legal right to see your parent’s financials, but you have the moral right to ask to be part of their advance planning and directives. Do it before feelings are hurt and tempers flare, and before you later offend or insult every friend, neighbor, acquaintance, or extended-family member in your search for help.
TheLongTermCareGuy input:
Long-Term Care is a lot of work. It is expensive to hire it done, but many adult children cannot afford to leave their work and families to provide for loved ones. LTC insurance is the least expensive and best way to address this problem, if you look into obtaining it while healthy and preferably below age 55. You pay dollars and get thousands of dollars later when care is needed. For those who do not plan in advance, there are still ways to help – even if already spending down to Medicaid. You can try to figure this all out yourself, or come see an expert who can help. Your choice.
For more information contact www.TheLongTermCareGuy.com
More Care At Home Being Paid By LTC Insurance
Many people still think of Long-Term Care insurance as only for nursing homes. For many years, these products have been paying for in-home care, adult day care, and assisted living facilities as well, and we now have figures to back that up.
The people who purchase LTC insurance must be healthy to do so, and thus there is a long tail on this product. Claims may not come in until 15-20-30 years or more after its purchase. Thus it can take quite a while for purchasers to use their coverage.
Reports are now starting to come in that people are paying for care at home with LTC insurance. In fact, up to 10% of home care is being covered by LTC insurance that was purchased some time back.
Most people want to stay at home if at all possible. However, they do not wish to be a burden on their family to provide that care. More home care agencies are opening up every year, it’s actually getting to be quite a competitive market. Having the cash flow to pay for this care is what LTC insurance policies provide.
Family gets worn out trying to provide all the care a loved one may need. A recent report claims that compared to people who do not provide support, caregivers who did were 79% more likely to experience emotional difficulties and more than twice as likely to experience physical problems as well as financial difficulties.
Dementias like Alzheimer’s Disease are the hardest situation for family caregivers. You may have promised to provide the care, but at some point it may simply become impossible. You may remember your promise, but your loved one probably does not. Dementias can entail a host of caregiving concerns, not the least is that the one cared for may not want to get into the water to bathe, resulting in a struggle every time.
Now we hear on the news that people over age 75 who use heartburn medications have a much higher incidence of dementia.
What does all this mean to you? If you are healthy yet, do not delay – investigate LTC insurance for yourself so you do not end up putting family in such situations. I got mine at 52 and I am thankful I did. Even though I am very active with work and travel, I could never qualify to purchase the coverage I have today at 66.
If you are in Wisconsin, give us a call at TheLongTermCareGuy.com and lets schedule a time to investigate. Dial (800) 219-9203 or of in Green Bay dial 884-3030. We will be glad to sit down and offer idea so you can decide what to do.
LTC Planning, No Matter The Situation
If Long Term Care (LTC) is needed, but not planned for, there are a number of options to make the money last longer or protect some of it. The best and least expensive way to handle this would have been to purchase LTC insurance while still healthy, preferably in your 40’s or 50’s. By the time we’ve hit 60, a fourth of us can no longer qualify to buy this insurance.
I’ll use a recent example where I was called in to a financial planner’s office as his client’s wife was about to exhaust her short duration LTC insurance policy. The client owns a cottage in addition to a house, $200,000 of IRA money in addition to $180,000 of non IRA investments. He owns a life insurance policy with minimal cash value and his wife has one where the cash value is only slightly less than it’s death benefit.
One of the children would like the cottage and may be able to purchase it. Medicaid does not allow two homes, only one, and it must be sold for fair market value so as not to be a gift and disqualify her from receiving Medicaid.
His life insurance policy with a very small cash value but a significantly higher death benefit would be a shame to lose per Medicaid’s requirements. One of their children could purchase it for fair market value (the cash value) and pay premiums to keep it in force until his death. Hers has cash value nearly the same as the death benefit so it could be surrendered and after paying any income taxes on the gain, the remainder could be used to purchase allowed items like plot, marker, vault, casket, etc. This would be in addition to the irrevocable burial trusts they already purchased.
In Wisconsin, the at-home spouse’s IRA accounts are not a countable asset (currently), so we can ignore those for now. This leaves him with some at risk assets, primarily money. If he were to fund irrevocable burial trusts for his children and their spouses now, he would only be allowed to keep half of remaining assets when Medicaid takes their “snapshot” of assets. If he waits until wife is on Medicaid, and the spend down amount is identified, then he can fund those irrevocable trusts for children and spouses of, while keeping his entire half for himself.
A house presents a timing issue as well. If the at home spouse decides to sell the house while spending down to Medicaid (prior to being on Medicaid), the sale price becomes an at risk asset that must be spent down. If the at home spouse waits until the institutionalized spouse is ON Medicaid, and then sells the house, those funds can be retained by the at home spouse.
As you can see, there are things that can be done to protect assets when someone needs LTC. Every situation is different. Knowing what can be done and when to do it can be very helpful. We often have family meetings to simply explain the Medicaid rules. While we can establish the irrevocable burial trusts for you, your children and their spouses, there are no fees for doing so at The Long Term Care Guy.
For more information, visit www.TheLongTermCareGuy.com or give us a call at (920) 884-3030.
Who Are The Caregivers?
Let me start with a study done last year which said: By 2020 (now only 4 years away) there will be more people in the US working as caregivers than working in retail.
This will be true not only because everyone shops on Amazon now, but because we did not have enough children to take care of us in older age and must hire this done, at home or in a facility. Where will all these workers come from?
Most caregiving jobs do not require a college degree. I am getting bulk mail from facilities begging me to come work for them, all training provided, no experience needed. Of course they are minimum wage mostly, and few offer much for health benefits, but the jobs are plentiful. That is because we continue to pass through age 65 at the rate of 10,000 per day. You read in many places, but we are also turning 85 in record numbers as well.
Who are the caregivers that we will hope to find available for our care when needed? There are currently 43.5 million caregivers in the US according to the USA Today newspaper. Their average age is 49, but 24% are between 18 and 34. 19% are over age 65, and 60% are female. Some of them are taking time away from high paying jobs, or turning down transfer or promotions to continue the work they do for loved ones.
Caregivers help with day to day tasks that we healthy people do for ourselves. 78% of caregivers provide transportation. 76% shop for groceries. 72% do housework and cleaning. Meal preparation is done by 61%, while 54% manage finances for another, and 31% arrange other outside services.
They help with daily activities like getting in and out of bed and chairs (43%), getting dressed (32%), getting to and from the toilet (27%), bathing and showering (26%), eating (23%), and dealing with incontinence and diapers (16%). A whopping 57% deal with tube feedings or injections.
How well will your family or children be prepared to take over such duties? Stress is a huge challenge for 26%, not enough time for self affects 16% and 11% find themselves financially burdened by providing care to a loved one, probably because 49% go to work late, leave early, or take time off.
It’s going to get worse. There are currently about 6.7 caregivers available for every boomer who turns 65 in 2016. by 2031 there will be 4 and by 2045, when today’s 51 year old turns 85, there will be just 3 caregivers available for each of them.
It appears that depending on family might not work out so well. I doubt the people who tell me they plan to die peacefully in their sleep might find that plan stymied by their health as well. Those who say the government will provide forget the government is us, and there are too many who will need care for the healthy ones trying to hold down a job and care for us at the same time.
My Long-Term Care insurance policy is getting larger each year by 5% compounded (a built in benefit). I will have the cash available each month to pay for whatever care I might need. Those with the money to pay for such care will always get the best care in the nicest settings. Have you actually thought about what your plan is? By age 60, a fourth of us can no longer buy this insurance. How long will you wait before investigating it? Do you feel lucky this year?
More information is available at www.TheLongTermCareGuy.com
Do Wealthy People Need LTC Insurance?
Some financial planners might say that if you have enough savings, why insure? While that might seem like a fair question, let’s put something in perspective: There is a 1 in 1800 chance of a claim on your homeowners insurance in any given year. HHS says once you’ve reached 65 there is a 70% chance you will need LTC. So which one do they say you don’t need (which can cost many hundreds of thousands) and which one do they make sure you have (which might cost $100,000 to $300,000 – and rarely happens)?
There are several other reasons for wealthy people to insure for LTC. When care is needed, which accounts will be tapped first? Which stock will be sold (or maybe we should wait until next year)? Is it the right time to liquidate bonds? Which real estate should we sell, and what will the capital gains taxes be?
A stream of tax free money (another good reason to insure) that comes every month can leave investments in place to mature. No family fighting over which assets to liquidate. Remember, your children who are arranging all this for you, will be liquidating their inheritance.
Today’s Wall Street Journal had an article on curbing elder abuse. It happens. Someone “borrows” from mom or dad’s estate while they are getting care. If Medicaid is needed when assets run out, these “borrowed” amounts may be counted as gifts making Medicaid unavailable.
” Elder financial abuse is expected to grow dramatically” says the WSJ. The articles suggests financial advisors might soon be expected to report suspected financial abuse. Such abuse is up over 12% in just the past two years. Having a regular stream of insurance payments to cover the costs of LTC means less likelihood of anyone needing to invade savings and investment accounts.
Lastly, the return on LTC insurance, if it is needed, is huge. If you never need to use it, wouldn’t that be wonderful. However, if it is needed, $60,000 of tax deductible premiums over a lifetime can yield nearly a million dollars. And that is not dependent on stock or bond market returns.
So, do you plan to simply spend all those assets down when care is needed? Or will you at lest investigate the insurance that can pay for LTC and leave your assets to go to those you want them to go to? Do so while you are still healthy enough to have this option available.
For more information visit www.TheLongTermCareGuy.com