This week’s topic is on long term care insurance. A Villages-Online reader asked if she was in need of purchasing a policy. In her mid-60’s and recently widowed, she is reviewing her financial and long term plan.
I will share that having operated two assisted living/memory care communities, where the costs begin at the mid-$3,000 range and only go up significantly from there, I provided insight to my husband, who at that time had a very active CPA Practice in Seattle. Not only did we buy policies for each of us when I explained the cost of the basic rent and additional care costs as needs increase, but my husband began advising his clients to look at Long Term Care as a way to ensure quality high end care if they would come to need it; and also preserve assets for the children if that was a financial goal. Additionally, though this seldom comes to fruition, he advised clients to encourage their children to take out Long Term Care policies for their parents and pay for it to protect their future windfall! What a great idea!
When looking at a long term care policy, you need to consider what kind of care you would want you should need assistance with your daily living tasks. Questions to think about are in home care vs moving into an assisted living; do you have family members who will be close by; what if you develop memory issues which is usually the most expensive long term care cost; do you have enough savings to supplement your monthly income to cover the monthly fees of assisted living or memory care or will you fall short and not have the range of choices as to where you would want to live during this time of your life?
I consulted my trusted colleague Jeff Gower, financialadvisor from Edward Jones Investments, in Summerfield. I asked Jeff to give me some facts on Long Term Care insurance from an investment viewpoint.
Jeff shared with me following information.
The definition for eligible coverage is when a person becomes chronically ill and requires substantial assistance to perform at least two of six Activities of Daily Living (ADL’s) for at least 90 consecutive days. These are: bathing, continence, dressing, eating, toileting, and transferring.
The other eligibility is if the individual is cognitively impaired to the point that supervision is required to protect the individual for safety and health reasons.
In today’s modern world, technology and health care advancements have expanded our life expectancies, but as we live longer our opportunity to require assistance grows greatly.
And although a large number of people below age 65 require long-term care, 70 percent of the population over 65 will claim benefits- more in the comfort of their own home than not and over 65% will be women. Most of us enjoy planning for a long vacation or dreaming about plans for a home interior makeover or that first big landscape project. Few realize how financially critical it is to plan to protect your hard earned assets from the higher than cost of living increases associated with receding long-term care. One of the biggest keys is to have a written plan, share it with those who love, care and will be there for you, and act early to take out these policies while we are younger and healthier. This is especially important for couples who can share some of the premium costs while applying for a larger total amount of care benefits for both. And newer innovative solutions offered by the insurance companies are helping more and more applicants get started by offering different levels of inflation indexing and hybrid-style policies which offer a blend of life insurance and returns of premium options.
The key to all policies remains being healthy when you apply. So what is the right amount of affordable coverage? Only a professionally trained advisor or insurance agent is qualified to discuss and recommend the suitability of coverage levels needed and desired to match the financial goals of each individual or couple. Long-term care insurance should be properly discussed as an important part of any worthwhile long term investment strategy and it should be reviewed annually along with life insurance, annuities, tax changes, and asset allocations within one’s portfolio. Plan for the expected, prepare for the unexpected and position your portfolio for both; you will be glad you did.
Please send your questions to The Savvy Senior, Jane Bloom at [email protected] or visit www.theotherdaughter.org