If you are like most people, thinking about the consequences of future health and aging will have on you and your family is not something you want to spend any time on.
The fact is you probably do everything right. You try to take care of your health. You have a job, and you save for your future retirement. You are hopefully enjoying your life and family. You probably don't think you will ever need help with your daily activities in the future. You ignore the risks of long-term care and cognitive decline as something that happens to someone else.
Besides, if you require long-term care, your adult children or spouse can provide the care, or you'll just take money out of your savings to pay for care.
Like most things in life, there is a lot more to the story. First, understand your chance of needing long-term care services and supports increases dramatically with age. However, with advances in medical science, people require long-term care at all ages. Yet, once you reach the age of 65, your risk of needing some type of extended care service increases dramatically. The question is, "when?" and "for how long?"
By the time you get to age 40 you have already have experienced changes in your health. Your body is not the same as you were when you were 20. As the years go by, you will find a decline in your health and changes in your body and mind.
Some of these changes will result in your need for long-term health care. Need help with daily activities doesn't mean you are in a nursing home. Most long-term health care is delivered in your home. However, as your needs progress you may require more care services. There are significant costs associated with long-term care, not to mention the considerable stress and burden placed on your family.
Think about it. Are you prepared for the financial costs and burdens of aging? The problem is not just about money. The fact is long-term care is both a cash flow problem and a family problem.
Reasons People Require Extended Care
People require long-term care due to illness, accidents, or the impact of aging. Caregiving is hard. An older spouse is usually not going to be in a good position to be a full-time caregiver. Daughters or daughters-in-law have their own careers, family, and other responsibilities. Studies show that caregivers suffer both health and financial issues by adding caregiving to their responsibilities.
Don't forget your adult children who have to either provide care or manage caregiving. This role often leads to anxiety, depression, physical health problems, and financial problems. Family members often find themselves thrust into the role of being a caregiver, and the job is physically and emotionally demanding.
Care Costs Will Have Dramatic Impact on Savings
Imagine the financial impact long-term care costs will have on your finances in the decades ahead. Many people are unaware of how expensive long-term health can be and the consequences of these costs on lifestyle.
Paid care is costly and gets more expensive over time. It drains your savings and adversely impacts your income, lifestyle, and legacy. The LTC NEWS Cost of Care Calculator says the nursing home's average cost is over $100,000 a year. While most extended health care is not nursing home care, the other alternatives, including in-home care, are also costly.
You will see that the cost varies based on location and the type of care you require. Most people are not prepared for dealing with these expenses - even if they have the money.
Health Insurance/MedicareWon't Pay for Most Long-Term Care
Health insurance and Medicare(for those 65+) and MedicareSupplements will not pay for any custodial care (help with activities of daily living), which is the most common type of extended care that you will require. They also pay a minimal amount of skilled long-term care, which is often delivered in a nursing home or rehab facility.
Long-Term Care Insurance is a product that will pay for all types of care (in-home or facility). Many plans also provide other benefits like case management, bed reservation, respite care, and more.
Long-Term Care Insurance works very well. In 2020 the major insurance companies paid over $11.6 Billion in benefits to American families. These tax-free benefits pay for your choice of quality care with your choice of setting.
If it weren't for an affordable Long-Term Care Insurance policy, American families would have either had to pay for the care from savings or have their family members provide the care. In some cases, both.
Not too many people want to buy insurance. However, Long-Term Care Insurance gives you a choice of care and places you in control, giving you and your family peace-of-mind.
Seven Big Reasons to Plan for Long-Term Care
Here are the seven reasons why a Long-Term Care Insurance plan will ease the burden on your family and safeguard your savings and income:
- Choice of care. Most Long-Term Care Insurance policies pay benefits for all types of care in the setting you and your family desire. You get to choose how you use your benefits once you qualify for them. Most people want to avoid a nursing home. Most policies provide benefits for care at home, adult day care, assisted living, memory care, and a nursing home. Your family doesn't have to be concerned about providers' quality as the care decisions, and the providers are left to you and your family.
- Elimination of Sibling Fracture and Stress. Without an advance plan, the responsibilities of how to manage and provide care will fall on the adult children and their families. When a sibling lives farther away from their caregiver brother or sister, they may not realize the day-to-day tasks of being a caregiver or managing paid care. Even strong relationships can fracture with the stress of caregiving. A Long-Term Care policy will eliminate most of this stress so that a family can be family.
- Case Management. This is related to number two. Many Long-Term Care policies will pay for a nurse case manager or social worker who will help make recommendations and develop a care plan. This is not managed care as you do not have to do what is recommended, but it will eliminate the stress placed on one of your adult children attempting to find caregivers or facilities and making arrangements even if they are not providing the care itself.
- Eliminating Stress in Marriage Relationships of Your Adult Children. Let's face it; women are much better at dealing with this type of thing than men are. They are more natural caregivers and nurturers. So, when you require extended care, the responsibility might be falling on a daughter-in-law. Often this will directly impact your son's marriage. Long-Term Care Insurance provides the resources for quality care in the setting you and your family desire. Most plans, as mentioned above, provide some type of care management as well. This will reduce stress and help your son's family.
- Lifestyle Preservation. Longevity is a real issue with the advances in medical science. This means both you and your spouse might be living when one of you requires long-term care. If you are paying for care out of your own savings, this will impact the other spouse's lifestyle (unless you have millions and millions of dollars in savings). Once the person who requires care passes-away, less money will be available for the surviving spouse's retirement needs. A Long-Term Care policy will safeguard savings, so lifestyle is not impacted dramatically.
- Estate Preservation. No matter if you have saved $200,000 or $12,000,000, you probably worked hard to achieve it. Most people would rather keep their savings in the family. A Long-Term Care Insurance policy provides tax-free benefits so you won't have to spend-down assets so your children and grandchildren can enjoy your legacy. Partnership Long-Term Care policies provide additional dollar-for-dollar asset protection. They are available in most states. Even a small policy can safeguard a large amount of your entire estate, depending on your estate's size.
- Peace-of-mind. As people get older, they have more anxiety. People start to worry about who will take of them or how the bills will get paid. Once you are older, your planning choices become very limited. A Long-Term Care policy you put in place before retirement gives you that peace-of-mind for the rest of your life. You will know this risk is taken care of, eliminating much of the worry. This anxiety is not limited to just you. As they see their parents' age, many adult children start to wonder how their parents will be cared for, who will provide the care and how the bills will be paid. These questions add anxiety to their lives. While many children may say, "sure, we will take care of you," they generally don't know what that means until they become older. A Long-Term Care Insurance policy reduces this anxiety for everyone.
While planning for the impact of longevity is often thought of as a financial consideration, it is really all about your family. When you consider these and other issues surrounding the financial costs and burdens of aging, Long-Term Care Insurance is an easy way to address these concerns. These policies safeguard assets and ease the burdens otherwise placed on those you love. But you will have access to the quality care you expect.
But, what about the cost of the insurance? Is it expensive?
Fact: Long-Term Care Insurance is Affordable for Most People
You often read that Long-Term Care Insurance is expensive, and the costs keep going up. Is that true? The answer is easy. For most people, Long-Term Care Insurance is very affordable. Plus, today's Long-Term Care Insurance is also rate stable.
Most people today purchase policies before retirement. Premiums are based on your age at application, health, and the amount of benefits you wish to have in the policy. You design the plan. Typically, a Long-Term Care Specialist will be able to make appropriate recommendations after asking you questions about your goals and concerns and factoring in the cost of care in the area of the country you plan on living in.
Most people today are in their 50s when they obtain coverage; however, people in their 40s and 60s can do so as well affordably, depending on health. It is your health that allows you the ability to obtain coverage. Every insurance company has its own underwriting criteria.
Long-Term Care Insurance Specialist Will Help You Plan
A Long-Term Care Specialist will ask you detailed questions about your health, medications, surgery history, and family history to determine which insurance company to choose to find the best coverage at the best value.
If an insurance agent just gives you quotes without asking you many detailed questions, then the information they provide will be questionable. A Long-Term Care specialist will provide you with accurate quotes with professional recommendations after shopping from all top companies.
The American Association for Long-Term Care Insurance (AALTCI), a national consumer education and advocacy group, suggests using a Long-Term Care Insurance specialist instead of a general insurance agent or financial advisor.
The AALTCI defines a specialist as a person who has been working primarily in long-term care for at least three years, has at least 100 clients with an LTC insurance policy, and works with at least three major insurance companies.
Easy - Affordable - Rate Stable
Premiums are also intended to remain level. This means the premium does not go up each year or every few years unless you have a plan that allows you to purchase additional coverage. In that case, you are self-increasing your premium.
Most states have rate stability rules in force, making today's Long-Term Care Insurance easy, affordable, and rate stable. You can see if your state has rate stability rules in place by clicking here.
This does not mean a premium can never go up. You may have read stories about premium increases on older "legacy" policies. These were all priced before the interest rate crash. Today's policies are also priced for the low-interest-rate environment. These new plans also have much more conservative and scientific underwriting than those much older plans did.
Experts say the chance for increases with these new plans is very minimal.
The only way for an increase is for the insurance company to ask your state's Department of Insurance by showing a substantial need, and it must impact a full class of people, not just you.
Premiums also do not change with age or health or claims status (although most policies will waive the premium when you are receiving the benefits).
Hybrid Long-Term Care policies are either purchased with one single premium or with guaranteed never to increase on-going premiums. While these policies are expensive, they do come with a death benefit in addition to the long-term care benefit.
A qualified Long-Term Care Insurance specialist can review your options and help you make the best decision. You can find a trusted and qualified specialist by clicking here.
The bottom line is simple: Long-Term Care Insurance is a vital part of your pre-retirement plan to safeguard your savings and reduce the burden placed on your loved ones. Be sure to start planning now when you are younger and enjoy reasonably good health.
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