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November is Long Term Care Insurance “LTCI” month, which promotes awareness of the need for and benefits of buying long term care insurance to protect you and your assets.
Who needs LTC Insurance?
Find out by taking a quick quiz:
* Have you known anyone who’s received long-term care in a nursing home? How did that affect them and their families?
* How would a $7000 per month nursing home bill for you or your spouse affect your lifetime savings?
* Could you lower Long-Term Care expenses if you received nursing care at home as long as possible?
* Do you think medicare will pick up the tab for your long term care?
* Would you be willing to spend down your hard-earned assets, so you could qualify for state-funded long-term care in a medicaid facility?
* Would you be willing to spend your hard earned assets by self funding long-term care for you and your spouse, thereby draining your financial legacy for your children or charitable causes?
* Do you think your family or friends will provide your long-term care? Have you asked them about this?
* Why are these questions important to you or your aging loved ones?
These are vital questions that people over age 45 should answer for themselves and for their aging parents. Why?
Medicare does not cover long term care expenses.
You may want to avoid a nursing home and stay in your home as long as possible, yet family and friends may not be able to provide the long term care you may need some day.
Current statistics reveal that 70% of seniors will require Long Term Care in their lifetime. Because Americans are living longer now than in previous generations, we are facing new risks and rewards of increased longevity.
What’s a top cause of bankruptcy for senior citizens today?
Seniors can’t afford to pay the skyrocketing costs of medical bills.
As you live longer, you may have survived a battle against cancer or chronic illness. Yet winning that battle may harm your financial health and sap personal strength and mobility in your golden years.
Daily self-care activities may become an unexpected challenge for you, your spouse or your aging parents. You may need help with Activities of Daily Living, “ADLs”, like feeding yourself, dressing, bathing, homemaking, personal grooming, toileting, getting in and out of bed or chairs.
If daily help is needed for at least two “ADLs” for 90 days or more, then you qualify for Long-Term Care.
When you or your loved one need Long-Term Care, how do you prevent a long term nightmare?
Long-term care insurance first became available in the 1980s to prevent that nightmare.
That’s why the US government may allow tax deductions for Long Term Care Insurance premiums, so individuals and couples can fund all or part of their own long term care costs for insurance premiums, to avoid becoming a financial or emotional burden on families, to protect personal choice to avoid a medicaid long term care facility.
How do you know if Long Term Care Insurance is right for you?
If your income is less than $50,000 per year and your assets are less than $___________ then you will not qualify to buy Long Term Care Insurance. You may qualify for medicaid.
Even if your income and assets are greater than $50,000 and $100,000 respectively, you still may not qualify for long term care insurance unless you pass some health tests.
That is a big reason why healthy people in their mid-40s to mid-60’s decide to buy their long-term care insurance before any health issues arise that might disqualify them from getting coverage.
Have you heard that long term care insurance is expensive? Are you afraid you can’t afford it?
Many people think they can’t afford coverage until they receive a custom long term care plan designed to fit within their budget.
What features and benefits are important in your long term care insurance plan?
* Look for coverage that offers an immediate cash benefit with no waiting period for home care payments which may begin as soon as your health care provider confirms that help is needed for two or more activities of daily living for 90 days.
* Choose a monthly benefit amount that is paid on calendar days, not service days. You want monthly payments to begin as soon as you meet the ADL requirements to receive long-term care coverage.
* Don’t choose to wait to receive payments until you receive 30, 60, 90, 120 days of service. Service days could take a year or more to fulfill your waiting period, if you only receive home services a day or two each week, supplemented by caregiving help from family and friends.
* Don’t choose a policy that sets a daily limit for expense coverage, instead of monthly. Why? If a policy covers $167 per day limit, but you spend $1000 for home care services one day, then you will be responsible to pay service expenses over the $167 daily limit. If your policy covers a $5000 per month limit, then your tab for $1000 service received in one day would apply to that monthly limit, giving you freedom to choose services you need each month instead of per day.
* Consider increasing the amount of the monthly coverage you buy, instead of buying an inflation rider between 1% and 5% compounding annually. Why? This inflation rider increases the monthly premium costs for a lower amount of monthly coverage than you could buy if you don’t buy the inflation rider.
* Choose a policy that provides 30% to 40% of the monthly benefit in cash, without being required to supply receipts for reimbursement of services. This feature empowers you to choose how to allocate your monthly care budget.
* Choose a policy that includes management of your long term care services, so you can rely on the experts to monitor that you are receiving the care that your health professional prescribed.
Which type of Insurance Company should you choose?
Be aware that some insurance companies are getting out of the long term care business. Why?
Because paying benefit claims is too expensive for them and that’s eroding corporate profits in insurance companies traded on stock exchanges. Their goal is to produce profits for their shareholders, so publicly traded insurance companies must either raise rates for long term care coverage or get out of that business, as some are doing now.
Why choose a Mutual Insurance Company instead?
A Mutual Insurance Company is owned by their policy owners, not stock shareholders, so they don’t have to worry about creating profits on Wall Street. The goal of Mutual Companies is to deliver all the contracted claims-benefits to their policy holders.
Should you self fund your own long term care, if you can afford it?
Let’s say you’ve accumulated a half million dollars in assets and you’re thinking about self funding your long term care expenses instead of buying insurance to cover it.
As a successful business person, you may prefer to leverage your assets and transfer the risk to your insurance company. Why?
Let’s work the numbers:
Let’s say you’re age 65 and you decide to spend $300 per month on Long Term Care Insurance to protect $500,000 in assets you’ve worked hard to accumulate.
At age 65 you could pay premiums of $300 per month for 20 years till you need long term care, thereby paying $72,000 in premiums to protect $500,000 in assets.
Or at age 65 you could pay premiums of $300 per month for 30 years till you need long term care, thereby paying $108,000 in premiums to preserve $500,000 in assets.
What if you pay monthly premiums for a Long Term Care policy, but you end up needing little or no long term care in your lifetime?
Remember current statistics indicate 70% of seniors will need Long Term Care. If you sense you’ll be part of the 30 % of seniors who won’t need it, you may want to buy a Return of Premium Rider. This rider repays a portion of your premiums minus any long term care expenses paid out. Your beneficiaries would receive that return of premium after you and your partner become deceased.
Is there a benefit in buying two long term care policies to protect you and your partner?
Buying two policies not only provides long term care to you and your partner when it’s needed, but you also may receive a 30% discount on the second Long-Term Care policy for a spouse or life partner when two policies are purchased at the same time.
Buying a shared Care rider also allows the ill spouse-life partner who’s in long term care to use some of the benefits of their healthy partner, while saving a year of coverage for the healthy partner if needed someday.
Would you like help to determine if Long Term Care Insurance coverage is the right choice for you and your partner, or for your aging parents?
I’d like to offer you a free phone consult at no charge. I am a licensed, certified professional, helping individuals and couples protect their assets, transfer risks, and produce retirement income guaranteed to live as long as you do.
How do you schedule a 15 minute complimentary consultation with me? Let’s schedule a day and time for our consult when you call me at 630.841.5504
Let’s talk soon,
Hadley Finch
P.S. This is not intended to offer legal advice nor financial investment advice. Please consult your lawyer, accountant and/or licensed investment adviser to determine how long term care insurance fits into your financial and estate planning.
