More families than ever have been affected by long-term health care. More attention has been paid to this problem due to the COVID-19 virus crisis. However, this is not a new problem. Advances in medical science bring longevity. With longevity come the costs and burdens of aging. These health problems can be due to illness, accidents, or simply the impact of aging.
Caring for others is always difficult for family members. The role of the caregiver is physically and emotionally demanding. You can’t really depend on a spouse, because if you are older, your spouse is too. Adult children will have their own careers, families, and responsibilities. A recent survey by the Associated Press-NORC Public Affairs Research Center says that many young adults already provide long-term health care services for their elderly loved ones. It is not easy for them.
The survey indicates that one-third of American adults under the age of 40 have already provided care to older family members. Another third expect to be called upon to do so in the next five years.
The risk of needing long-term medical care is high and increases as you age. Once you are past 40, you will notice changes in your health. You see changes in your body. As you get older, you see a decline in your memory.
What this means is that the possibility of needing long-term medical care is less of a “if” and more of a “when” and “how long.”
The fact is, the risk of needing long-term medical attention is simple: Either it will happen 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, either at home or in a facility. The clear majority of long-term care services are custodial in nature. Custodial care is when you need help with normal activities of daily living or require supervision due to a cognitive problem such as Alzheimer’s or another type of dementia.
Health insurance or, when you are 65, Medicare and your Medicare supplement will pay for only 100 days of specialty care services. Long-term care is as much a cash flow problem as it is a family problem.
However, some financial planners and insurance agents prefer that you not explore long-term care insurance. Many don’t understand the product, underwriting, policy design, and power of the LTC Insurance Partnership Program, which is available in 45 states.
Why? There are many reasons. Some simply ignore the facts. However, most of them are well aware of the impact of financial costs and burdens of aging. So why not long-term care insurance?
There is a great misperception of the cost of policies. You may have even read some of the articles. They report high premiums or premium increases over time.
The fact is, premiums are very affordable for most people. Sure, if you’re 75 when you get a policy, the premium will be based on that age and your health at 75. However, people are adding LTC insurance to their retirement plan before retirement, and most are in their 50s. Most of my clients are between 45 and 67 years old. At these ages, premiums are very affordable, especially if you are in good health and your policy is designed properly.
Premiums can vary more than 100% between insurance companies for the same level of coverage.
Policy design is essential. Most claims are for home care, which generally costs less than a specialized nursing home. Policies pay for quality care in the setting you want. There are several settings for long-term care services, including home, adult day care, assisted living, memory care, and a traditional nursing home.
The American Association for Long-Term Care Insurance says that most claims are for services in the home. Top companies, in 2020, paid out more than $ 11.6 billion in benefits to American families. The policies work and they work very well. They give families options and reduce the tremendous burden placed on their loved ones.
The association’s LTC policies provide additional dollar-for-dollar asset protection. With a Partnership LTC policy, you can buy enough long-term care benefits to protect your assets without overselling and overspending.
Some insurance agents and financial planners may want you to buy expensive life insurance policies instead, or worse, do nothing and insure yourself.
Self-financing is not the best way to address the future costs and burdens of aging.
There are a handful of exceptional “hybrid” policies available. These are life insurance policies or annuities designed specifically for long-term care. For some people, this might be the best solution. But generally, a general insurance agent or financial planner is not the person to talk to about these options.
You need an experienced LTC insurance specialist. There are a handful of specialists nationwide. These are people, like me, who represent top companies, understand policy design and underwriting, know the power of the partnership program, and have processed claims, so they know how policies are actually used.
In my case, I have thousands of clients across the country in the 21 years that I have been helping people plan for aging. Remember, premiums are based on your age and health at the time of application, as well as the amount of benefits you want to have. These policies are custom designed, so you need a specialist who works with 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 seen premium increases. These “legacy” policies were listed and marketed prior to the rate stabilization rules that are now in effect in most states.
Today’s LTC insurance policies are much more scientific and conservative underwriting than ever. Premiums now consider low interest rates, low maturity rates, and actual claims experience as well. According to the Society of Actuaries, today’s long-term care insurance plans are much less likely to increase premiums in the future.
Regardless of those facts, it is not easy for insurance companies to increase the rates of the products that are sold today. This should give consumers a lot of peace of mind as they plan a way to safeguard savings and reduce the burden that long-term care places 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 it’s all about 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 addresses your future longevity, your family will be responsible for everything. The first thing my clients’ adult children tell me at the time of the claim is that their mom or dad’s policy gave them time to be family. They are always grateful for the help that allowed them to be loving and supportive. This way, they can spend quality time with mom or dad and not worry about where the money is coming from or worse, having to take care of themselves.
Working with a specialist will allow you to obtain 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 affect you, your family, your savings, and your lifestyle. LTC insurance is easy and affordable asset protection. These plans not only protect your savings, but also reduce the burden on family members. Let your financial planner take care of your mutual funds, stocks, and bonds. That is your experience. Let a general insurance agent provide you with the best deal on your home and auto insurance. But for long-term care, seek the help of an expert. Take action before you retire to take advantage of lower premiums and improve your overall health.