More families than ever have been affected by long-term health care. More attention has been paid to this issue due to the COVID-19 virus crisis. However, this problem is not new. Advances in medical science bring longevity. Longevity comes with the costs and burdens of aging. These health problems can stem from illnesses, accidents or simply the impact of aging.
Caregiving is always difficult for family members. The role of the caregiver is physically and emotionally demanding. You really can’t depend on a spouse because if you are older so is your spouse. Adult children will have their own careers, families and responsibilities. A recent poll by the Associated Press-NORC Center for Public Affairs Research indicates that many young adults are already providing long-term health care services to their older loved ones. It is not easy for them.
The survey indicates that a third of American adults under the age of 40 have already provided care for older family members. Another third expect to be called upon to do so within the next five years.
The risk of needing long-term health care is high and increases with age. Once you get past the age of 40, you will notice changes in your health. You see changes in your body. As you age, you notice a decline in your memory.
This means that the risk of needing complementary health care is less of an “if” than a “when” and “how long”.
The point is, the risk of needing additional health care is simple: it will or it will not happen.
When you need long-term care, someone will be responsible for finding a family member to provide care or purchase care, at home or in a facility. The vast majority of long-term care services are prison-based. On call is when you need help with normal activities of daily living or need supervision because of a cognitive problem like Alzheimer’s disease or another type of dementia.
Health insurance or, at age 65, Medicare and your Medicare Supplement will only pay for 100 days of qualified health care services. Long-term care is both a cash flow issue and a family issue.
Yet some financial planners and insurance agents prefer that you not explore long term care insurance. Many do not understand the product, the underwriting, the policy design and the power of the LTC insurance partnership program, which is available in 45 states.
Why? There are several reasons. Some simply ignore the facts. However, most of them are very aware of the impact of financial costs and the burden of aging. So why not long term care insurance?
There is a huge misconception about the cost of policies. You may have even read some articles. They indicate high premiums or increases in premiums over time.
The point is, premiums are very affordable for most people. Of course, if you’re 75 when you buy a policy, the premium will be based on that age and how healthy you are at 75. However, people add LTC insurance to their retirement plans before retirement, most of them in their 50s. Most of my clients are between the ages of 45 and 67. At these ages, premiums are very affordable, especially if you are in good health and your policy is well designed.
Premiums can vary by more than 100% between insurance companies for the same level of coverage.
The design of the policy is essential. Most of the requests are for home care, which usually costs less than a qualified nursing home. Policies pay for quality care in the setting you desire. There are several contexts for long-term care services including home, adult daycare, assisted living, memory care, and a traditional nursing home.
The American Association for Long-Term Care Insurance says most of the claims are for home care services. Large corporations, in 2020, paid more than $ 11.6 billion in benefits to American families. The policies work and work very well. They give families choice and reduce the enormous burden on loved ones.
LTC partnership policies provide additional asset protection dollar for dollar. With an LTC partnership policy, you can purchase just enough long-term care benefits to protect your assets without having to overbuy and spend too much.
Some insurance agents and financial planners may want you to buy expensive life insurance policies instead – or worse yet – do nothing and self-insure yourself.
Self-financing is not the best way to deal with the future costs and burdens of aging.
There are a handful of exceptional “hybrid” policies. These are life insurance policies or annuities specially designed for long-term care. For some people, this might be the best solution. But in general, a general insurance agent or financial planner is not the person to talk to about these options.
You need an experienced specialist in long-term care insurance. There are a handful of specialists across the country. These are people like me who represent all the big companies, understand the design and underwriting of the policies, know the power of the partnership program and have handled the complaints, so as to know how the policies are actually used.
In my case, I have thousands of clients across the country over the 21 years I have been helping people plan for their aging. Remember that the premiums depend on your age and state of health at the time of application, as well as the amount of benefits you wish to receive. These policies are tailor-made, which is why you need a specialist who works with all the major companies to help you find the right coverage.
So what about premium increases. Yes, it is true that older policies sold decades ago have had premium increases. These “legacy” policies were priced and marketed before the rate stabilization rules that are now in place in most states.
LTC insurance policies today are much more scientific and conservative underwriting than ever before. Premiums now take into account low interest rates, low lapse rates and actual loss experience. According to the Society of Actuaries, current long-term care insurance plans are much less likely to increase premiums in the future.
Regardless of these facts, it is not easy for insurance companies to increase the prices of products sold today. This should give consumers great peace of mind as they plan for a way to save their savings and reduce the burden of long-term care on their loved ones.
Perhaps the biggest difference between a long term care specialist and a financial planner or general insurance agent is that they view long term care insurance only as a financial decision. Yes, money is important. However, a long-term care specialist knows that this is all about the family, your family.
Yes, long term care is a cash flow issue. However, the consequences of long term care also affect your family.
Without a plan that meets your future longevity, your family will be responsible for everything. The first thing my clients’ adult children tell me when making a claim is that their mother’s or father’s policy has given them time to be with their family. They are always grateful for the help which allowed them to be loving and supportive. This way, they can spend quality time with mom or dad without worrying about where the money is coming from or, worse, having to provide the care themselves.
Working with a specialist will give you the precise information you are looking for. There are several reference websites for research:
LTC News offers articles and resources: http://www.ltcnews.com
US Department of Health and Human Services: https://longtermcare.acl.gov/
Long-term care will impact you, your family, your savings and your lifestyle. Long-term care insurance is simple and affordable asset protection. These plans not only protect your savings, but reduce the burden on family members. Let your financial planner take care of your mutual fund, stocks and bonds. It is their expertise. Let a general insurance agent get you the best deal on your home and auto insurance. But for long term care, seek expert help. Take action before you retire to take advantage of lower premiums and better overall health.