Not Planning for Long Term Care, Can Lead to Long Term Problems

Establish A Plan

Time after time we see scenarios where an individual or a couple did not adequately plan for future cost associated with Long-Term Care. Whether it is an insufficient plan or the failure to purchase a Long-term care all together, the negative effects can create more complications down the road. As we have seen over time, the cost of care for a sick or disabled individual is only going to increase. It is imperative to have conversations with your family and your agent on the importance of Long-Term Care planning. It is most important to establish a plan that will provide sufficient benefits if the need arises.

Leave the Excuses Behind

The all-time excuse for not purchasing Long-term care is either, “I won’t need it, I am healthy” or, “I can’t afford that!” Each of these reasonings can be truthful in the moment, but unfortunately, studies prove that an individual is much more likely to need care than anticipated, and for most individuals, they cannot afford NOT to purchase a Long-Term Care plan. As healthy as an individual may be in their younger ages, we can never see the future, but we can plan for the unforeseen. According to a study done by Gerber Life, 7 out of 10 individuals 65 and older will require Long-term care in their lifetime. According to American Action Forum, by the year 2030, approximately 24 million individuals will need Long-Term Care. This need for care can arise from an unforeseen illness or even a tragic accident that none of us could expect. Would you rather risk being the 30% that never needs any form of Long-Term Care, or would you rather plan for the 70% that do? When the weatherman tells me the chance of rain is 70%, I am packing a raincoat just in case and the need for Long-Term Care is no different.

Understanding How It Works

For an individual like Bill Gates or Jeff Bezos, purchasing Long-Term Care is nearly irrelevant and useless due to the ability to self-insure without hesitation, but unfortunately, that is not the case for most individuals in our society. The current Long-Term Care rates coupled with the expected increasing cost, creates an unfortunate hurdle for many families when a loved one is in need of treatment and care. As of the year 2021, according to Gerber Life, using the City of Atlanta for reference, the average monthly cost of a private room in a nursing home is $7,786 and $4,321 for home health aide. Thinking of this cost alone should develop some understanding of the cost that could be associated with obtaining care for a loved one in need. Over the next 10 years, those cost are expected to increase by roughly 10%. The cost of care has already increased by nearly 15% since the year 2016 according to a study published by Senior Living. Most individuals may desire to self-fund their potential Long-Term Care cost as an effort to save on premiums in their healthy years, but at the cost listed above with an average need of 3-5 years, an individual could be on the hook for anywhere from $250k to $500k. Without an adequate plan, a loved one could be without the funds to obtain the proper care needed or a family could be forced into debt to cover the cost.

Peace of Mind

When considering taking the risk and self-insuring for Long-Term Care, it is also important to think about the financial goals you have for your family. Although there may potentially be a sufficient pool of funds to self-insure, the cost associated with purchasing a Long-Term Care plan will be much lower than the cost of care, which will give you the ability to maintain and progress your financial goals. Even if only looking to develop a plan that pays for a portion of the potential care and looking to reinsure the remainder can create a much better future for you and your loved ones. Alleviating the financial stress that derives from the already heartbreaking need for care of a loved one, will help bring peace of mine to your family.

Our Main Goal

As someone looking to plan for yourself and your loved ones, it is important to understand what is offered and how to develop the best plan for you and your family. Many individuals will go with a Traditional LTC plan that offers a set benefit amount and benefit period, however there are historical cost increases to the premiums of these plans, and they are also considered use-it or lose-it. For a client willing and capable of spending additional premium to create financial security should the need for care ever arise, there are several hybrid products that not only provide Long-Term Care benefits but will provide a death benefit in the event that the need for care never arises. We call this a Long-Term Care plan with a Life Insurance safety net. Each of these products offer specialties and highlights that can prove beneficial to you and your family. One additional option for Long-Term Care protection is a permanent Life Insurance product that has a Long-Term Care rider added. This will establish a specific LTC benefit based on the face amount purchased and will allow you to use a pool of money, up the death benefit for LTC needs. When planning with your family and your agent, it is important to consider what type of plan works best for your budget and your goals. Our goal is to provide you and your loved ones with an adequate planning method, so that if the need for care ever arises, you are protected and that you and your loved ones do not have any Long-term problems.

Resources cited in article above:
https://www.genworth.com/aging-and-you/finances/cost-of-care.html
https://www.americanactionforum.org/research/the-ballooning-costs-of-long-term-care/
https://www.seniorliving.org/nursing-homes/costs/

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