Are you afraid of going broke in your golden years? Plan Long-Term Care Today

The baby boomer generation heads into rough and uncharted waters when it comes to their long-term care needs. By 2020, nearly 55 million Americans will be 65 or older, and life expectancy will continue to increase. In recent years, analysts have noted the impact of caring for the elderly on the so-called “sandwich generation” – adults who were responsible for the aging of their parents and their own children. With increasing life expectancy, the sandwich generation of the future may well refer to people in their 70s caring for their parents in their 90s, or adults in their working years helping two generations above them. With the looming prospect of serious long-term care needs, it is vital that individuals and families take their personal financial planning seriously and have a plan to pay for a long-term care event.

For many families, long-term care insurance (LTCI) can make a difference. LTCI coverage directly addresses the costs of caring for the elderly or disabled, in the setting that best suits their wants and needs. Whether the setting is your home, an assisted living facility, or a nursing home, LTCI benefits supplement other income and assets to minimize the impact of those expenses.

Client Study: LTCI Protects Care for 97-Year-Old Great-Grandmother

Ruth is a 97-year-old great-grandmother who purchased an LTCI policy 18 years ago at the urging of her son. Three years ago, still living independently, she recognized that she needed help with her activities of daily living and moved to an assisted living facility using her LTCI benefits.

Last year he was diagnosed with dementia. She was transferred to the center’s dementia unit, where she receives 24-hour care and continues to receive LTCI benefits. The current cost of your care is $ 6,900 per month. Your LTCI benefit pays $ 150 per day, or $ 4,500 per month, approximately 65% ​​of your LTC costs. The remaining $ 2,400 is taken monthly from your social security benefits and savings.

Assuming you continue to collect benefits, you will have collected $ 216,000 when the four-year benefit period ends. Now with the premium waiver, Ruth has paid a total of $ 48,900 in premiums since the inception of the policy. His LTCI policy has allowed him to pay for his care without draining his savings and without having to resort to Medicaid.

Is LTCI a good option for you or your family?

Here are some considerations that should be part of your discussion:

Educate yourself on the realities of long-term care. Ready for the impact of stickers? The average cost of a private room in a nursing home now exceeds $ 90,000 per year, and the average stay in a nursing home lasts almost three years. Government insurance programs other than Medicaid do not address long-term care problems.

Plan ahead, well in advance. LTCI premiums are most affordable when people sign up while they are still relatively young and healthy. LTCI buyers in their 40s or 50s can pay thousands of dollars less per year than older buyers, and few companies will write policies for people 75 and older. Health and family history will also affect the cost of premiums and the availability of coverage.

Take care of mom. Most of us are familiar with the fact that women tend to live longer than men. Industry statistics show that 71% of new complaints are from women. As a result, women’s LTCI premiums are typically higher than men’s (in contrast to life insurance, where women typically pay lower premiums). However, the investment is worth it considering the higher potential expenses they face. As mentioned above, buying LTCI at a relatively young age can help lower your premiums.

Customize a plan that suits your needs. LTCI products are available to suit very specific priorities. Options abound in terms of coverage amount, deductibles (commonly referred to as eligibility waiting periods), benefit increase options that take into account inflation, and specialized shared plans for couples. Insurance advisors often write plans combined with annuities or life insurance, taking advantage of the tax laws for traditional and asset-based plans. These tax advantages may include tax-free LTC benefits and / or tax-free 1035 exchange for asset-based annuities / life plans with an LTC rider.

Obviously, experienced guidance is imperative when considering these factors. Buyers should look for insurance professionals with strong LTCI experience who can fully describe the benefits and limitations of a plan. It makes sense to consult experts in your community; Costs can vary widely by geography and these experts will have the best access to accurate and relevant information.

We all must face the real changes that occur as we age and consider how best to protect our assets and our families. For those with the foresight, ability, and commitment to establish that protection, LTCI is a proven strategy that works.