LONGTERM CARE PLANS OR NEW HYBRID LTC PLANS ALSO AVAILABLE

We don’t really like to think about needing long-term health care services. But the reality is that in the U.S., someone turning 65 today has almost a 70% chance of needing some form of long-term care in their remaining years to help with performing everyday tasks like eating or bathing.¹ And these cost money.

Are you fully prepared for this scenario? According to the Department of Health and Human Services, the average use of long-term care services is 3 years.¹

Long-term care expenses can be a major risk to your overall retirement plan, and you need to have a plan for dealing with the need should it arise. If long-term care is needed, it will affect you and your caregivers financially, physically, and emotionally. Having a good plan in place for these concerns is critical to easing the burden on you and your loved ones. To note, 57% of family caregivers have children under the age of 18.²

What Are Your Options?

While it used to be that families cared for their aging relatives at home or elsewhere, today’s elderly increasingly rely on professional care from home health aides and nursing homes. Often, long-term care starts with services such as home visits, then, depending on your health and independence, may shift to other services that require a full-time nurse. Services will increase in cost if your required care increases over time.

You face a crucial decision as you get older: Should you rely on your retirement nest egg and other savings to pay the bill if you need long-term care, or should you consider the up-front cost of long-term care insurance?

When Should You Buy?

The older you are, the greater the chance you’ll have a medical event that requires long-term care, or that you’ll develop a health issue that will keep insurers from approving your policy application. People typically buy long-term care insurance when they’re in their 50s or they are reviewing their retirement plan with their financial advisor. You’re likely to pay less for the same amount of coverage than if you wait until you’re older and you’re less likely to have medical issues that disqualify you for coverage.”

In addition to the risk of your health deteriorating as you age, the financial cost of waiting to purchase a policy should be considered as it will typically become more expensive to purchase the same amount of long-term care coverage each year you wait.

How much coverage?

Most long-term care policies cover the same types of costs, from nursing home stays to home health aides. You have to decide how much coverage you want, both in terms of the dollar amount of your benefits and how many years you want those benefits to last. Buying long-term care insurance is like purchasing a pool of money that you can use for daily coverage (e.g., $200 per day) or monthly coverage (e.g., $6,000 a month).

Importantly, don’t buy more coverage than you can afford. Instead, consider reducing the amount of coverage to balance your financial situation with your long-term care needs. Also, recognize that there are different ways to pay for your policy. While some are single-payment-premium policies that you pay in one lump sum, other policies can be paid for through periodic premium payments. Keep in mind, however, that some policies may have the right to increase premiums after purchase; you should confirm that your premium payment amount is guaranteed.

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