Planning for
long-term care can be a daunting task and often something that you do not
seriously think about or discuss. The insurance policies covering this risk are
constantly changing making it that much more confusing. There is the
uncertainty of what types of services will be needed in the future making it
that much more difficult for you to tailor policy features to your personal and
financial preferences. More to the point, it’s a topic that is easily avoided
as you deal with the daily tasks of life as a healthy, active person.
However, let
me assure you that you can put a plan in place. The first thing you have to
understand and accept is having a plan is a necessity. Understanding the risks involved without
having a plan and its consequences to your family should give you the impetus
to wade through all the information. You will eventually reach a point where
you can make a comfortable decision about what plan is best for you.
WHAT DO YOU
KNOW? TRUE or FALSE (the answers can be found below)
- · An individual 65 years or older has a 40% lifetime chance of needing LTC
- · An individual 80 years or older has a 70% lifetime chance of needing LTC
- · Most LTC is provided in a nursing home
- · Expenses for individuals with Alzheimer’s are covered by Medicare
- · The average annual cost of nursing home care in Rochester is approximately $126,000
- · 1/3 of primary caregivers provide 30 or more hours of care per week
- · 65% of caregivers miss work, lose their jobs or change career paths
- · 46% of caregivers feel a negative impact on their family life and health
According to
Genworth’s A Way Forward: Highlights from Beyond Dollars 2013, the impact of
caregiving extends “far beyond dollars”. Genworth’s research shows “caregivers report that long-term care events
affected their finances, careers, lifestyles, health, relationships and state
of mind”.
Aging and
illness are a part of life. Every day
makes you one day older. Illness is unpredictable. The only way to lessen the
impact of these two natural events is to properly plan for their inherent
inevitability.
Now there’s
the task of sorting through the myriad of strategies that are available to
you. Following are guidelines that can
assist you.
A standalone
LTCI policy may be the right choice if you:
- · Have experienced a LTC situation and understand the impact on family and friends
- · Have a family history of Alzheimer’s
- · Want robust benefits that include inflation protection
- · Want greater asset protection; NYS Partnership plans offer total and partial asset protection
- · Want tax write-offs; there is a 20% tax credit on LTCI premiums in NYS
- · Are a business owner who can either write the premiums off as a medical expense or use pre-tax dollars through an HSA
A hybrid or
linked-benefit policy (life insurance policy with LTC rider) may be the right
choice if you:
- · Have never experienced a LTC event and feel the risk is not that great
- · Have a family history with no major illnesses
- · Are concerned about paying premiums for a policy that you might never use
- · Have liquid assets available that make it easier to self-insure for part of the risk
- · Have liquid assets available to pay a single premium to initiate a policy
- · Currently have a life insurance policy with cash build-up; you can exchange it without any tax consequences for a hybrid
- · Are not concerned about robust benefits and inflation protection
A life
insurance policy with a chronic illness rider may be the right choice if you:
·
Have
health conditions that render you uninsurable for a standalone LTCI policy or
hybrid
Legal
planning, a life settlement or reverse mortgage may be the right choice if you
are uninsurable for all the strategies listed above. You might opt for an
irrevocable trust as a means of Medicaid planning. If you are 65 years or older, a life
settlement is a way to sell a life insurance policy that is no longer needed
for its original purpose to a third party. You will receive an amount less than
the death benefit but more than the cash value to pay for LTC expenses. A
reverse mortgage will give you funds to pay for LTC using the equity in your
home.
The impact
and consequences of a long-term care illness can have a profound effect on a
family, especially the primary caregiver. My challenge to you is to confront
the risk, talk about it and use one of the strategies above to plan for it.
No comments:
Post a Comment