The New Reality - Long Term Care
What You Need to Know to Protect Your Assets
The good news is that medical advances over the recent decades have allowed people to live longer lives. The bad news is that conditions that would have resulted in death, may now leave you disabled - relying on others for care. Long-term care is needed when an accident or chronic illness limits one's ability to carry out basic self-care tasks such as personal hygiene, eating, or getting dressed, or when mental impairment requires constant supervision. An estimated 2 out of every 5 Americans will need this type of custodial care assistance. Nearly half of them are under age 65. You might think this care takes place primarily in a nursing home, but in fact, most of this care is provided at home.
The Costs
Like many health care costs, long-term care assistance can be expensive. Medical insurance, including Medicare, generally does NOT pay for this type of custodial, in-home care. If you or a loved one need this type of care, it will likely be paid out of pocket, easily adding up to thousands of dollars per month. Unfortunately, even the best thought-out retirement plan rarely takes into consideration the disabling consequences of living a long life. The assets and income you have accumulated over a lifetime of hard work are intended to pay for retirement - not for custodial long-term care. But there is a way to protect your retirement assets from this devastating scenario.
The Benefits of Long-Term Care Insurance
Long Term Care Insurance (LTCI) is an important part of a financial plan for living a long life. It helps keep families together, preserves your independence and protects your assets. LTCI doesn't replace the need for family involvement in providing care, but rather builds on it. It pays professionals to assist the family care-giver with the toughest tasks such as personal hygiene, bathing, feeding, and continence.
LTCI vs Investment
You might wonder if it is smarter to invest in the cost of a policy instead of buying long-term care insurance. A good policy for someone aged 55 to 59 costs about $1,500 annually. If you invest $1,500 each year and earn an average of 6% (after taxes), you'll have $8,963 in 5 years. However, in 5 years, your LTC insurance policy would pay up to $55,900 in yearly benefits for as long as you need care. In 20 years your investment will have grown to $58,489. But by then, long-term care is expected to cost about $111,438 per year. Your LTC insurance with a 5% benefit increase per year would pay up to $116,214 annually.
The Next Step
When considering long-term care insurance be sure to consult with a professional who is Certified in Long-Term Care (CLTC). Long-term care is a complex issue involving health care, law, insurance and finances. It should be integrated into a family's overall financial plan. A CLTC professional is highly trained in the long-term care field and knows the right questions to ask and how to properly implement LTC insurance.
Call us today to discuss the best way to obtain this vital financial protection.