When you think of long-term care, what is the first thing that comes to your mind? For many, it could be retirement homes or something associated with aging and increased medical needs. In a broad sense, this is appropriate, but a lot has changed over the past decade when it comes to options and how to finance them.
Baby boomers (and the next generation of retirees) need to plan for senior care in a different way than their parents did, as they face an uncertain future in benefits and rapidly rising medical costs. . And they live longer. When it comes to planning, many people have the ‘this won’t happen to me’ attitude, but about 70% of people over 65 will need some kind of long-term care assistance during their time. retirement.
The difficult question for many people is how do you plan for these unexpected expenses so that they don’t derail retirement? When planning for care costs, you have options such as allocating savings to medical costs or using benefits or family.
Long term care insurance is another option to consider. Over the past few years, insurance products have evolved along with the options and trends in healthcare. Today, almost half of the benefits paid by private insurers relate to home care or home care. Whereas before, this insurance was mainly used to pay for qualified nursing care. Many current policies also pay the benefit to policyholders or policyholders, unlike many policies in the past which paid directly to a nursing home. To better understand the evolution of long-term care, here is a closer look at long-term care planning past and present:
Government programs: The Silent Generation (those born during the Great Depression and World War II) were among the first to live longer and the first to gain access to formal nursing facilities. However, whether or not there would be rights was not a topic of conversation for this generation. As more baby boomers reach retirement age, the potential for strain on government eligibility programs has become a growing concern, as current benefits may not cover most services. medical conditions that a person will face.
Long-term care insurance: With long-term care insurance being a relatively new idea, many parents of baby boomers have likely overlooked the potential needs (and associated realistic costs) of formal long-term care. Since then, a number of options have been developed by insurers to meet the needs of baby boomers, and over time the characteristics of insurance have evolved. Some of them include:
- Simple long-term care insurance policies: These are policies that pay a benefit up to the daily or monthly maximum. The amount can be paid to the insured person, who can then pay the care provider. The insured person can also choose to pay for the health care provider to bill the insurance company directly.
- Life insurance policies with a single rider: Advanced benefit riders can be inexpensive additions to a life insurance policy, and they allow the death benefit to be paid (often up to 90%) before death if funds are needed for long-term care. duration. The amount paid to the insured is simply deducted from that person’s death benefit.
- Policies combining life insurance and long-term care insurance in one policy: Some insurance plan options may allow the payment of a lump sum premium for insurance that offers a combination of benefits such as a death benefit and the ability to advance most of that benefit for the needs of the person. long-term care. These policies may even include a “right to terminate” the contract in which the policyholder can change his mind after a period of time and the full premium is refunded (if no benefit has been paid).
Family: Relying on family may seem like the simplest option, and it is one that many people choose, sometimes out of necessity. However, the emotional, physical and financial stress of family members caring for a dependent family member can be a huge undertaking. If you plan to rely on your family members to meet your long-term care needs, be sure to let them know well in advance so they can create a plan to meet your needs and bless you.
An aging person in need of care can choose from many options to help provide or fund professional care, including family, government resources, self-insurance (if there are enough assets) or private insurance. Each of these options has some merit, but in most cases, no single option will cover everything. It’s hard to predict what kind of long-term care needs you might need, which is why you may want to speak to a professional who can discuss options for your particular situation.
* There can be many variations on insurance policies, so customers should carefully consider each policy based on their own current and potential needs