Many of us take for granted the good health we are currently enjoying, that is truly a blessing. Thank you to advancements made in the medical industry we are living longer. However, as we age our health continues to deteriorate. It is a fact of nature. Therefore, as we continue to age we all should plan for our senior years and the proper care during those years so we continue to enjoy life. What is certain is that our aging population, at some point, will require long-term care. Let me demonstrate a realistic scenario in our lives:
John and Jane Smith have addressed their retirement planning for the most well. Even with the recent economic situation they have a well established nest egg for their upcoming planned retirement. John is 62 and a retired accountant for the last two years, who enjoys playing golf; eventhough recently his health has not allowed him to enjoy the last couple of rounds. Jane is 58 accounting manager at a distinguished manufacturing company. She is getting ready for her planned retirement within the next 24 months. Financially speaking, John and Jane have been doing well. However, last week John was diagnosed with Parkinson’s disease. This news has Jane worrying about the care John will need and the strain this will place on their retirement savings and her current earnings.
The above scenario is a best case scenario, John and Jane have retirement savings they have developed over the years and Jane is still gainfully employed. People like John will often require home-care or 24-hour nursing care provided by a long-term care facility. The cost for long-term care is expensive and financially draining to a family. Without government assistance, many are questioning what other options are available. Long term care insurance helps provide funds for looking after a family member who is not unwell in the regular sense of the word but is still unable to go about a daily existence without help. This can include an individual requiring help walking to Alzheimer and Parkinson.
If John had LTC Insurance coverage, his policy might cover his residency in a nursing home or in a retirement home. He might also have access to any of the following: home care, adult care, respite care, and hospice care. Additionally, under his LTCI, John may be covered, for activities of daily living and stand-by assistance. All of these, can be very costly and can quickly deplete through a person’s and/or family’s savings.
The scenario above is a common one. During our financial planning one of the most common overlooked areas is long-term care. Why?
1. Denial - many people are confident they won’t get any illness or disability even if they become older.
2. Fear - people don’t want to think and become stressed with the problems that aging and long term care could bring. Also, they also avoid becoming a burden to their loved ones and families so they choose to handle this problem alone and never ask help from anyone.
3. Unaware of the true cost of LTC - many people do not understand how expensive long term care is these days and in the future.
4. Misinformed - Most Americans also think that Medicaid and Medicare will take care of the bills the time when they get in a nursing home; Medicaid and Medicare help only the low income and require those with extra assets to spend it down before they qualify for benefits in many cases causing unnecessary tax burden to the family.
Here are seven reasons why you should include LTC Insurance as part of your wealth protection program:
1. Numerous options - one advantage of long-term care insurance is that it covers a wide variety of options which can range from daycare for adults, care and taking care of for short periods, care in the hospital or retirement home, provide facilities care for Alzheimer's, home care etc .
2. Immediate help - Help is available from the first day of need itself. Depending on the policy benefit, a care giver can live in the house of the person requiring help. It'll also pay for a specialist, housekeeper, companion, caregiver and non-public nurse to go to the person needing help or stay for a few hours or days too.
3. Family savings remain secure - there isn't any need to touch family savings if a family member needs long term help. The Insurance will help cover most expenses if not all. Without insurance, the cost of providing long term care or perhaps care to a relation on a weekly basis can be terribly dear.
4. Tax repayments and inflation adjustment - Depending on the policy details, premium for long term care insurance are counted for all sorts of tax deductions. The advantages from the insurance aren't counted as earnings either. Also, an inflation adjustment actually helps increase the value of your premium.
5. Security - The sense of security is far greater in case of the insured person requiring help.
6. Daily allowance - a specific daily allowance can be opted for instead of bigger payments at longer intervals. However, this must be balanced with the premiums because the bigger the quantity of daily allowance you choose, the higher will be the premium payment.
7. Estate planning - By purchasing a policy, you not only accrue funds that would later cover long-term care costs but also preserve a portion of your money that can be put towards the cost of taxes payable on death, building an inheritance for your children and wealth preservation.
Before you choose a long term Care policy review what flexibility options are offered. LTC insurance offers many options from managed living, adult day care center, care home or home as a setting for the care that could need to be provided. Long-term care is a complex and misunderstood area of financial planning where it is easy to make costly mistakes. Deciding on an LTC insurance policy can be frustrating and confusing when handled alone. Therefore, it is important that your professional advisor be well versed in this area to properly advise you in the policy that is best for you.
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