The baby boomer generation is heading into rough and uncharted waters when it comes to their long-term care needs. By 2020, nearly 55 million Americans will be 65 or older, and lifespans continue to lengthen. In recent years, analysts have noted the impact of elder care on the so-called “sandwich generation” – adults who were responsible for their aging parents as well as their own children. With the lengthening of the lifespan, the sandwich generation of the future could well refer to people in their sixties caring for their parents in their 90s, or adults in their working years helping two generations above. ‘them. With the prospect of serious long-term care needs looming, it is essential that individuals and families take their personal financial planning seriously and have a plan in place to pay for a long-term care event.
For many families, long term care insurance (LTCI) can make all the difference. LTCI coverage directly covers the expenses of caring for the elderly or disabled, in the environment that best meets their wishes and needs. Whether it’s your home, an assisted living facility, or a nursing home, ILTC benefits complement other income and assets to minimize the impact of these expenses.
Client study: LTCI protects the care of a 97-year-old great-grandmother
Ruth is a 97-year-old great-grandmother who purchased an LTCI policy 18 years ago at the behest of her son. Three years ago, still living independently, she recognized that she needed help with her activities of daily living and moved into an assisted living center using her ILC benefits.
Last year she was diagnosed with dementia. She was transferred to the facility’s dementia unit, where she receives 24-hour care and continues to receive LTC benefits. The current cost of her care is $ 6,900 per month. His LTCI benefit pays $ 150 per day, or $ 4,500 per month, or about 65% of his LTC costs. The remaining $ 2,400 is taken each month from her Social Security benefits and savings.
Assuming she continues to receive benefits, she will have received $ 216,000 when she completes her four-year period. Now on the waiver of premiums, Ruth has paid a total of $ 48,900 in premiums since the inception of the policy. Her LTCI policy allowed her to pay for her care without depleting her savings and switching to Medicaid.
Is LTCI a good option for you or your family?
Here are some considerations that should be part of your discussion:
Learn about the realities of long-term care. Ready for sticker shock? The average cost of a private room in a nursing home is now $ 90,000 per year, and the average stay in a nursing home lasts almost three years. Government insurance programs other than Medicaid do not address long term care issues.
Plan ahead – far ahead. LTCI premiums are most affordable when people enroll while they are still relatively young and in good health. LTCI buyers in their 40s and 50s may pay thousands less per year than older buyers, and few companies will write policies for people over 75. Health and family history will also impact the cost of premiums and the availability of coverage.
Take care of mom. Most of us know that women tend to outlive men. Industry statistics show that 71% of new applications come from women. As a result, women’s premiums for ILTC are typically higher than men’s (unlike life insurance, where women typically pay lower premiums). However, the investment is well worth it given the larger potential expense they face. As mentioned above, buying LTCI at a relatively young age can help lower premiums.
Customize a plan according to your needs. LTCI products are available to meet very specific priorities. Choices abound in terms of amount of coverage, deductibles (commonly known as waiting periods for eligibility), options to increase benefits that take inflation into account, and specialized shared plans for couples. Insurance advisors often design plans combined with annuities or life insurance, leveraging tax laws for traditional and asset-based plans. These tax benefits may include tax-exempt LTC benefits and / or 1035 tax-exempt swaps for asset-based life / annuity plans with an LTC rider.
Obviously, experienced advice is essential to take these factors into account. Buyers should look for insurance professionals with a solid background in LTCI who can fully describe the benefits and limitations of a plan. It makes sense to consult with experts in your community; costs can vary widely depending on geography and these experts will have the best access to accurate and relevant information.
We all need to face the real changes that occur with age and think about how best to protect our property and our families. For those with the foresight, ability and commitment to establish that protection, LTCI is a proven strategy that works.