Long Term Care Considerations:

Long-Term Care insurance doesn’t protect individuals – it protects families. It is thought that people buy LTCi to maintain their independence, to get into a good nursing home, or to avoid being a burden on their families. These are good reasons, but most people truly expect they won’t ever need LTCi. They purchase it because they understand the consequences a need for care would have on their loved ones.

The majority of care is informal, which means family and friends are the main providers. Custodial care is often all consuming for caregivers, leading to serious emotional and physical costs. It completely changes the lives of those providing care. LTCi allows your family to supervise, rather than provide for care.

Long-Term Care insurance doesn’t protect assets- it protects income. You spend your lifetime working and accumulating assets which will generate sufficient income to maintain your standard of living during retirement. It is reasonable to assume that your retirement income is matched with your retirement expenses. If nothing has been allocated for care, the income must be reallocated. Where else can the money come from?

In its purest sense, LTCi is no different from disability coverage in that they both provide a source of income. In this case, it pays for LTCi expenses. This allows your retirement income to be used for its intended purpose; supporting lifestyle and keeping financial promises. Without LTCi, the family has few options, among them is curtailing lifestyle, liquidating assets, or both.

Not all wealthy people can afford to self-insure. Oftentimes, long-term care costs are assessed by looking only at the average stay in a nursing home, which is about 2.5 years. At $70,000 per year that expense would be $175,000. Long-term care is not about nursing homes and assets don’t pay for care, income does.

The majority of LTCi claims submitted are for care at home and in the community. That cost can easily exceed the cost of a nursing home. For example, the average life expectancy of an individual with dementia is from 9-11 years. A more accurate equation should consider the cost of the care over the length of the illness, regardless of whom or where care is provided.

To pay for care, liquidating assets poses serious issues with regard to tax consequences, selling in a bear market, illiquid investments, among others.

We are committed to discussing how LTCi helps the emotional, physical and financial well-being of your family. LTCi is essential in protecting the families we care for. Please feel free to contact me to discuss this important protection.