For Financial Independence, Make Long Term Care Insurance Part of Your Financial Strategy
Sam Miller, MBA, CLU, ChFC, CASL 516-222-5036
If you’d rather write your will than have a discussion about planning for long term care (LTC) needs, you’re not alone. Results from a 2006 John Hancock Life Insurance Company (John Hancock) Long Term Care Survey revealed that more than half of the respondents opted for the will. In addition, a slightly less percentage said that going to a nursing home is worse than becoming bankrupt and half said they consider it worse than dying. It’s clear that the emotions surrounding the very thought of losing our independence can paralyze us from taking action. But it doesn’t have to be that way. Once people understand the facts about long term care, the planning process is much easier and offers peace of mind about preserving savings, protecting family members from the burden of caregiving, and retaining independence. Caregiving and Its ImpactLong term care is the assistance needed by someone who can no longer independently perform daily activities such as eating, bathing or dressing. This care can be received at home, in an assisted living facility, adult day care center or nursing home. It’s important to understand that long term care does not necessarily have to mean nursing home care, which seems to be the biggest fear and misconception associated with LTC. In fact, 80 percent of older adults who receive LTC do so in their own homes or community settings. That’s good news. Yet, with the majority of LTC services provided at home, more Americans today have first-hand experience with caregiving and how it affects their personal lives, family, financial security and work situation. A portion of the John Hancock LTC survey focused on the impact of caregiving, and over half of the respondents said that a family member or friend needed care. Knowledge is PowerWhile it is true that the vast majority of Americans recognize the importance of planning ahead, there is a lack of knowledge about LTC as well as the pros and cons of funding alternatives. With the national average cost for nursing home care at more than $71,000 and the expenses of at-home care or services provided in a community setting on the rise – these costs can really add up. Many rely on the hope that government programs like Medicare and Medicaid will pay for LTC services — but these programs can be very limiting. Long Term Care Insurance Is the Best Funding SolutionFortunately, there is an easy way to prepare for long term care and its costs. Long term care insurance (LTCI) was identified by 42 percent of the survey respondents as the best solution for funding long term care costs. It’s important to note that LTCI premiums are based on your age and health when you apply, so it makes sense to buy when you are young. When you think about it, planning for long term care is important to your overall financial and a LTC insurance policy can help:
- Protect your retirement savings
- Give yourself control over where you receive care – as most policies cover care in all settings these days (home, assisted living facilities, adult day care and nursing homes)
- Give you the means to pay for higher quality care
- Relieve your family and friends from heavy caregiving responsibilities
- Receive not only financial support, but professional advice, additional resources and service provider discounts
It is true that knowledge is power. The more you know about long term care planning, the more you realize that it is no different from planning for your retirement or other key financial goals. Taking it one step at a time is the key. Do some of your own research (see NAIC, Shopper’s Guide to Long-Term Care Insurance, www.naic.org) or contact me at <insert phone, email or website> to learn how we can work together to develop a strategy that fits your needs and budget. Sidebar:
John Hancock’s Long Term Care Quiz tells us: 80% of older adults who receive LTC do so in their own homes or in community settings.43% didn’t know that eligibility for Medicaid requires spending down assets to state-prescribed levels.39% incorrectly assume that Medicare is the primary funding source for most seniors’ LTC costs.69% didn’t know that nearly 40% of the LTC population is under age 65.30% incorrectly believed that the average one-year stay in a nursing home costs $30,000, when the national average is more than twice that, at $71,000.37% mistakenly believe the average length of stay in a nursing home exceeds four years.