Archive for November, 2013

Hedging your bets on long-term care

Long-term care insurance is often a tough sell. Many people don’t want to pay premiums on a policy that would only pay out if they become dependent in their old age. Partly in response to this reluctance, life insurance policies with a long-term care rider have soared in popularity as an alternative. But do these combination products make sense for boomers?

Denial notwithstanding, many people will need help with long-term care for themselves or a loved one. Medicare doesn’t pay for long-term care supports and services, yet seven in 10 people turning age 65 can expect to use some form of long-term care during their lives, according to the U.S. Department of Health and Human Services. Studies have shown that many workers haven’t saved enough to cover their basic needs in retirement, much less nursing homes that can cost more than $80,000 per year, or in-home aides at about $19 per hour, in today’s dollars.

For many consumers, a deterrent to buying a traditional, stand-alone long-term care policy has been the fact that premiums are forfeited if care isn’t needed. To be sure, the same goes for auto insurance and homeowner’s insurance, and consumers seem pretty much resigned to that fact.

But a long-term care purchase taps into fears that many don’t want to confront, experts say. “People can imagine their house burning down or an auto accident, but no one wants to envision going into a nursing home,” said Joe Heider, regional managing principal with Rehmann Financial in Cleveland, Ohio, who sells life insurance policies with long-term care riders to his clients.

Approximately seven out of 10 65-year-olds will need some kind of long-term care during their lifetimes, and most such costs aren’t covered by Medicare.

Enter so-called combination insurance, which can pay a benefit whether the policyholder ends up needing care or not. These are typically whole or universal life insurance policies with a long-term care insurance rider. More than 86,000 combination policies were sold in 2012, an increase of 19% compared with 2011 results, according to the insurance industry group LIMRA. Meanwhile, growth in individual, stand-alone long-term care policies was essentially flat during the same period, LIMRA reports, with 233,000 policies sold in 2012.

A typical combination policy will pay out a benefit if long-term care is needed and a death benefit to a designated beneficiary if it is not, or if care expenses don’t exhaust the value of the policy. People are attracted to this flexibility and like the fact that they’ll get some money back no matter what happens, Heider said.

In fact, some stand-alone long-term care insurance policies offer their own answer to the unneeded-coverage problem: a return-of-premium feature. This isn’t a death benefit—it’s simply a return of paid premiums, less any claims paid, to a policyholder or his heirs. But this option can add more than 50% to premium costs versus a use-it-or-lose-it policy, and it hasn’t caught on with either insurance sellers or consumers, according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

A have-it-both-ways combination

Combination policies typically require a bigger upfront payment than traditional long-term care policies. Combination policies usually require a lump-sum premium payment, or one spread out in a few installments, in contrast to the continuing annual or monthly premiums for stand-alone long-term care policies.

In one illustration offered by Lincoln Financial Group for the company’s MoneyGuard Reserve Plus combination policy, a healthy 60-year-old nonsmoker pays his $100,000 premium in three annual installments of $33,333. If he needs long-term care benefits, the man can receive a maximum monthly benefit of $5,787 for a maximum of six years. (Relatively few older people need such care for longer than six years.)

If he doesn’t need care, his designated beneficiary will get $138,896 in income tax-free “death benefits.” If he uses just some of his care benefits, that amount would be subtracted from his death benefits. A third option would be a full return of premium, or $100,000 paid back at any time after year 5, provided all planned premiums are paid.

On the other hand, a 60-year-old male purchasing roughly equivalent coverage via a traditional long-term care insurance policy would pay $2,100 per year, according to the American Association for Long-Term Care Insurance. And while that’s no small financial commitment, it looks relatively modest next to the big upfront payment typical of a combination policy.

Running the numbers

For this and other reasons, some advisers argue that hybrid policies don’t offer the best deal for the protection they provide. “Anything they can package together, I can probably put together for cheaper,” said Jeffrey Boyer, wealth adviser with RegentAtlantic Capital in Morristown, N.J.

Insurance products will typically deduct their costs—for the broker’s commission, the company’s operating and underwriting costs, and other expenses—from the product’s payout, and their marketing materials don’t state an explicit product fee like, say, a variable annuity or mutual fund would. So Boyer and his colleague compared the payouts in three hypothetical scenarios of a combination policy versus a stand-alone long-term care policy plus a stand-alone, 30-year term life insurance policy that together offered a very similar benefit to the hybrid policy.

Their calculations included the assumption of some future rate increases on the stand-alone long-term care insurance policy, as many policies have had such increases of late. Their hypothetical purchaser was a healthy 60-year-old woman. (Like long-term care insurance, life insurance gets harder to buy as one gets older and, presumably, sicker.)

In the RegentAtlantic analysis, the hybrid policy offered the best deal in just one scenario: the one in which the purchaser died at age 91 without having needed any long-term care. In the case where the purchaser needed long-term care from age 84 to 89, the stand-alone long-term care policy plus term life insurance offered $348,325 more in total benefits, net of premiums. If the policyholder died at age 65 without using any long-term care benefits, the stand-alone policies would have provided an additional $138,604 in benefits.

The reason for this differential, Boyer said, is likely the opportunity cost of paying a large upfront premium instead of investing the money in stocks or another growth vehicle (their analysis assumes a 5% investment return on money not needed to pay premiums) and the high expenses and commissions built into the hybrid policy.

Do you need life insurance?

Families considering their insurance options should start with the question of what risk they’re trying to insure against, said Keith Klovee-Smith, head of life management services forWells Fargo Private Bank. Many people in their 50s and older have no need for life insurance. Their kids are grown, and they don’t have estates large enough to owe estate taxes that could be covered by an insurance payout.

For all their differences, both combination and stand-alone long-term care policies have some similarities that families should keep in mind, experts say. Both require prospective buyers to pass medical underwriting. “Basically, you have to be healthy,” said Marvin Feldman, president and CEO of the Life Foundation, a nonprofit organization that educates consumers on insurance.

And once the long-term care policy is in force, consumers who buy either traditional or combination products must meet standard criteria for needing care to tap their benefits. For example, it wouldn’t be enough for a healthy older person to simply move into an assisted living facility. She would also generally need help with at least two activities of daily living, such as bathing, dressing, or eating, and that need must be documented according to the insurer’s precise specifications.


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No One Wants to Think About Long-Term Care, But Here’s Why You Should

OK, it’s time to stop putting off the inevitable: thinking about who will take care of you when you can no longer take care of yourself.

It’s Long-Term Care Insurance Awareness Month, making it the perfect “excuse” to explore something no one wants to think about, but that we all need to. Keep in mind that according to government statistics, 70% of people will need some type of long-term care after age of 65.

Here is a comprehensive look at what long-term care insurance does and why people have purchased it—from those who have it. Take a couple of minutes to watch:

The bottom line: Long-term care insurance helps make sure that you’ll have access to high-quality care should you ever need it. And using insurance to pay for care also means that you won’t need to choose between getting the assistance you need and spending down your life’s savings.

Give your agent or advisor a call and get the conversation started.


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Choosing The Right Homecare Service for Mom and Dad

The long term care industry offers variety of senior care options nowadays. Your number of choices can be overwhelming, so it’s best to study each of these services or facilities first before choosing what’s best for your aging loved ones. For starters, you can familiarize yourself with the different elder care services through Together with this, you should consider th needs of your loved ones too as well as the cost of these services. With the help of these factors, I’m pretty sure that you’ll find the appropriate care setting or type of care that can satisfy their needs. It’s just all about researching and taking into consideration their needs. It would also help to ask their opinion about this certain type of care since they’re the ones who’ll receive care. Don’t jump the gun right away, do your assignment first through research and by asking recommendation from other people who are receiving long term care.

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We all get to some extent that our ages mirror how our bodies work. once we get the right age to require take care of ourselves and our kids can’t manage to worry for us, we tend to select this hospice care services.

If you or your parent is consistently confused, forgetful and typically wanders, their safety is in danger. If your parent has severe competence problems and can’t get round the house safely and on their own which hiring an in-home care isn’t an option, that’s the most effective time they have help.

Assisted Living represents a philosophy to produce residential semipermanent care in a very home-like atmosphere that maximizes autonomy and independence for its residents. it’s an aided living residence as a special combination of housing, personalised subsidiary service and health care designed to satisfy the wants of these who facilitate with activities of daily living as outlined…

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Seventy percent of American’s over 65 will need long-term care

With this recent report, people should take long term care seriously as early as possible. This is no laughing matter especially when you’ve reached the age wherein you need long term care but you don’t have the means to pay for it. No one wants to be in that scary situation, so I hope this would serve as an encouragement for them to plan ahead. According to, planning is essential nowadays especially if you are nearing your retirement years. The cost of long term care is on the rise and life expectancy is much longer these days. These two factors bring the sense of urgency, that people should plan early and secure their future. Instead of ignoring the facts why not start planning today and make a significant difference on your future.

Dealing with Dementia

70%Wow. Ignoring the facts won’t make them go away. They seem unbelievable.

The National Clearinghouse for Long-Term Care Information reported that about 70% of Americans who live to age 65 will need long-term care at some time in their lives, over 40 percent in a nursing home. Learn more by visiting their website and to learn more about how you can plan.

The same report cited the averages: Those who are 65 today will need long-term care services for three years. Women need care for longer (on average 3.7 years) than do men (on average 2.2 years). While about one-third of today’s 65-year-olds may never need long-term care services, 20 percent of them will need care for more than five years.

The most important thing you can do today (at ANY age) is set up a Durable Power-of-Attorney. There may be situations in which even your spouse needs this…

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Long-Term Care Insurance Tweetable Facts

It’s Long-Term Care Awareness Month. A lot (most?) people don’t really understand what long-term care insurance is, what it does and why people need it as a part of a sound financial plan.

Click on this link for a free guide, aptly named, What You Need to Know About Long-Term Care Insurance. It answers a lot of questions, and may bring up some additional ones. Be sure to sit down with an agent or advisor who can walk you though the finer points of this coverage.

Below are some facts about long-term care insurance that are “tweetable,” meaning you can simply click on them and they’ll generate your tweet for you. Spread the word!

51% of Americans say they need long-term care insurance, but only 14% own it. #LTCI
(Source: “2013 Insurance Barometer Study,” LIFE and LIMRA)

$83,950 = median cost/year for a private nursing home room. Think long-term care insurance. #LTCI
(Source: “Genworth 2013 Cost of Care Survey,” Genworth)

25% of adult children provide personal care and/or $ assistance to a parent. Think long-term care insurance. #LTCI
(Source: The MetLife Study of Caregiving Costs to Working Caregivers, 2011)

Of those needing long-term care, 37% are age 64 or younger! Think long-term care insurance. #LTCI
(Source: American Association for Long-Term Care Insurance)

$203 billion = value of unpaid care provided by family/friends for those with Alzheimers/ dementia. #LTCI
(Source: Alzheimer’s Facts and Figures, 2010)

$274,044 = lost wages/SS benefits when women leave work early to care for ailing parents, spouse or family. #LTCI
(Source: “The MetLife Study of Caregiving Costs to Working Caregivers,” MetLife, 2011)

“The typical purchaser of long-term care insurance is age 59. #LTCI”
(“Who Buys Long­Term Care Insurance in 2010­2011?” AHIP, March 2012)

73% of LTCI claims paid for care at home or in an assisted living facility. #LTCI
(Source: “The 2011 Sourcebook for Long­Term Care Insurance Information, AALTCI, 2011)

95% of long-term care insurance policies pay for care in nursing homes, assisted living and at home. #LTCI
(Source: “Fact Sheet: Long­Term Care Insurance: 2012 Update,” AARP)


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6 Tips for Fixing Long-Term Care in America

ImageEvery day for the past two years, about 10,000 baby boomers have turned 65. And every day until 2029, about 10,000 more will do the same.

For many, it’s just another birthday. But taken as a whole, the pace of those birthdays is a stark reminder of how quickly the U.S. is aging — and how unprepared the nation may be.

Consider the following:

    When the last of the boomers turns 65 in 2030, about 1 in 5 Americans will be 65 and older.
    The number of people in the U.S. with chronic conditions will have increased by 37 percent between 2000 and 2030.
    Most Americans over 65 will need about three years of long-term care.
    Nursing home care runs roughly $72,000 per year, on average. Add it up and many Americans could be facing bills of $216,000 or more. And contrary to popular belief, it’s usually not covered by Medicare.

So what’s the U.S. doing to prepare? Virtually nothing. The federal government has no plan in place, and things are bleaker still on the personal front. Just 35 percent of Americans have set aside money for their long-term care needs, and most haven’t even taken the basic step of talking with their family about their preferences.

(MORE: How Government Could Cut Long-Term Care Costs)

But look close enough and the news becomes a little brighter. In communities throughout the country, residents are pulling together to help each other save money, stay active and live in their own homes longer. On the international stage, places like Finland and Taiwan have found success, too.

That’s why a collection of the nation’s top experts on long-term care gathered at historic Eastern Market on Capitol Hill in Washington, D.C. on Monday, to discuss ideas for fixing the nation’s long-term care system.

Many agreed that it’s time for U.S. policymakers to start taking stock of those ideas and bringing them to scale. The forum, titled “Global and Regional Models for Long-Term Care: Can They Work Nationally?” was hosted by the PBS NewsHour’s parent company, MacNeil/Lehrer Productions, and the SCAN Foundation, an underwriter of the NewsHour’s health unit.

While the issue can be daunting in scale on the national level and difficult to confront personally, it all boils down to one thing, said Dr. Bruce Chernof, president of the foundation and chair of the federal government’s recent Commission on Long-Term Care. “All of us want to age with dignity, independence and choice,” Chernof said at the forum. “For some people, that might mean being in a nursing home because your needs are so great, that’s the best and the safest place. But for most of us, it’s about being in the homes and communities we choose, around the people that we love and circle of friends that support us. And that’s a really different mindset when it comes to providing and planning for long-term services and supports.”

(MORE: Suze Orman’s Advice on Managing Long-Term Care Costs)

We put together a list of “6 tips” for improving the U.S. long-term care system — one each from our six influential panelists. (You can watch the NewsHour’s long-term care special in its entirety at the bottom of this article.)

Tip 1: Keep it Local
Howard Gleckman is author of the book Caring for Our Parents and writes frequently on long-term care issues. He’s a contributor to Forbes Magazine and a resident at the Urban Institute.
Howard Gleckman: I would suggest community and bottom-up solutions. One of the real problems we’ve had in this country is trying to find the single answer. In truth, there are probably many different answers, and different communities are going to come up with different solutions. To the degree that we can, government can at least try to stay out of the way of those solutions, and perhaps even take the next step and encourage them.

So there’s a lot you can do in terms of helping people stay at home — that neighbors and friends can do for one another. Of course, there comes a time when people need professional help being bathed or fed — or they may need adult diapers changed. At that point, you really can’t expect neighbors to do that. But there’s a lot you can do before you get there that neighbors can do to help people live comfortable, better lives at home. And that’s the main idea of most of these community-based programs. It may be providing transportation, it might be friendly visits, it might be meals.

(MORE: Why Long-Term Care is Headed for a Crisis)

Some communities have created “villages” within their community to achieve this through different models: there are villages that require membership and pay dues, there are some that have a professional staff, some are all-volunteer, some are related to faith-based organizations. I’ve even seen hospitals and nursing homes doing outreach into their communities to achieve similar goals.

The one issue that concerns me a little bit about the village model is that, for the most part, it seems to be working for upper-middle-class, highly educated white people. For some reason, we haven’t found the key to make this particular design work in lower-income and minority communities. Which is why maybe it’s not going to be a village movement for those populations. Maybe it’s going to be something different, or maybe it’s going to be a village but a different version of a village. So that’s why I say those kinds of local organizations should figure this out for themselves, and the role of government, the role of nonprofits, should be to support those solutions.

Tip 2: Change the Financing
Dr. Mark McClellan is a senior fellow and director of the Health Care Innovation and Value Initiative at the Brookings Institution. A doctor and economist by training, he’s a former commissioner of the Food and Drug Administration and former administrator of the Centers for Medicare and Medicaid Services.

Dr. Mark McClellan: One important way to make long-term care work better in the United States is to move our financing away from silos, where we have separate funding for Medicaid, separate funding for out-of-pocket costs, separate funding for acute health care costs. We need to put it together and let people control how that money is spent on their behalf. That’s what’s behind our “Money Follows the Person” initiatives in states around the country, that’s what’s behind integrated care approaches in states like Minnesota. All of those steps are important for getting to better long-term care at a more sustainable cost.

These programs get implemented at the local level, but they depend a lot on federal and state funding, and traditionally, our funding has gone to institutions like long-term care facilities, and not to the individuals who use those institutions. So putting more of those dollars under the control of individuals can lead to better outcomes and lower costs. People can use those resources to stay in the community. They can use those resources to help get coordination of services to prevent avoidable hospitalizations. They can stay out of the nursing home and avoid other very costly outcomes that otherwise we’d have to pay for on the health care side.

Tip 3: Focus More on the Poor
Dr. E. Percil Stanford is the president of Folding Voice and the KIND Corporation, a San Diego-based group that provides housing for low-income older people. His focus on gerontology has been cross-cultural, diverse and global.
Dr. E. Percil Stanford: During the past several decades, long-term care policies and programs have gained significant momentum at the state and federal levels. Unfortunately, considerable attention from the most well-intentioned institutions and organizations has focused primarily on the middle and upper classes. Personal savings and private insurance are not impact areas that reform or vastly improve the quality of long-term care for millions of poor older people. According to some sources, the percent of poor people 65 and older has been as high as 23 percent during the past three years. The quality gap in long-term care and support services for the aged poor and other poor people must be closed.

Science and technology with appropriate design strategies can lead the way for continuing to explore culturally appropriate and economically feasible approaches to long-term care services and supports. Long-term care policy developers have the challenge to design policies that ensure that poor older people, regardless of ethnicity, sexual orientation or religion, receive quality services and supports in a dignified and respectful manner. As more poor people age, it is essential to rethink how to design policies that directly address the long-term care of all deserving citizens.

To ensure that current and emerging millions of poor and near-poor individuals, particularly the aged, have equal access to long-term care services and supports, existing federal, state and local agencies and organizations should be charged with having a laser-like focus on this burgeoning wave of potential long-term care recipients. A mandate of this nature becomes more urgent as the non-white population in the United States approaches a majority. The shape, size and texture of this emerging long-term care segment is novel in many dimensions and cannot be glossed over.

Tip 4: Build a Comprehensive National Strategy

Debra Whitman is AARP’s executive vice president for policy, strategy and international affairs. She’s an authority on aging issues with extensive experience in national policymaking.
Debra Whitman: The United States is vastly unprepared to meet the long-term care needs of our rapidly aging society. While some states and local communities are developing innovative systems, we need a comprehensive national strategy to help people remain in their homes as they age. The strategy should include:

    Concrete steps to ease the burden on family caregivers — the invisible army of over 42 million individuals who care each day for their family or friends, often at great personal cost.
    Steering more resources in public programs like Medicaid towards care in one’s home and away from institutions.
    New ways of thinking about local communities, and the supports they offer to optimize independence — including developing more houses, apartments and transportation systems that are accessible and affordable.
    Better integration with health care services and expanded use of technology to help people live independent, secure and engaged lives as they age.

A more effective, seamless financing system that enables individuals and families to pay for services they need without having to impoverish themselves.

Tip 5: Begin the Conversation

Jennie Chin Hansen, is CEO of the American Geriatrics Society, the nation’s leading membership organization of geriatrics health care professionals. She worked for more than 25 years with On Lok, a nonprofit organization in San Francisco that became a model for the federal law that incorporated the program of all-inclusive care to the elderly called PACE into the Medicare and Medicaid program.

Hansen: With most of us having or having had the experience of a loved one or friend who lives the complex set of experiences often called long-term assistance or care, these are the moments of opportunity to begin the conversation of how we might experience that journey ourselves. Current research shows that seven of 10 of us will require longer-term assistance, sometimes modest but often significant over a period of years. It’s not easy to think about and embrace but likely present in our awareness. If we are women, this is even more significant due to our greater longevity and often less financial security.

We need to dip our toes in that conversation before we find ourselves actually living that experience. Let’s take those opportunities to “chat and chew” with our friends and colleagues and have those conversations when one of us happens to be the “carer” living this rather universal story. Consider it a “study group” opportunity as we discuss the universal journey — covering topics as to who can and will provide support (our network) where we hope to reside (where we live), how much we might need to live on (our money and affordability) and what is most important to us along the way, but especially when life becomes most challenging (expressing our hopes and wishes). Let’s proactively help each other build greater confidence, clarity and capacity.

Tip 6: Make It a Human Right
Dr. Laura Gitlin is a professor and founding director of the Center for Innovative Care in Aging at Johns Hopkins. Most recently, she has been working in Chile on a community-based model of care for older adults with dementia.

Dr. Laura Gitlin: We need to grow a long-term care system based on multiple principles, and one principle I believe — which is an integral part of the Finnish model — is that long-term care is a basic right. Finland has a government-sponsored approach to long-term care, and it’s included in their equivalent of a Bill of Rights. They’re coming up with all different ways of operationalizing that basic principle. And I believe we need to start with that premise in the United States: long-term care is a basic right.

From there, we need to expand on our understanding of what long-term care is and what long-term care needs are. So it’s not just about self-care and instrumental activities but it’s really about the entire gambit of needs that older adults have, particularly those with complicated conditions such as co-morbidities and functional limitations. So it’s not just about enabling people to be able stay at home and have their self-care and instrumental activities needs met, but also to have other, equally important needs met, such as engagement in meaningful activities and socialization and integration into the community. So I think that our understanding of long-term care needs to actually expand in our understanding. It has to encompass a family-centered approach, not just the person. Without seeing the person within their total environment of home, family and community, we’re not going to address the long-term care needs of older adults.

I also think that in the United States, it isn’t going to be one system. One system does not meet all the different needs of individuals, whether they be very poor or the near-poor or those that can afford long-term care insurance. We’re going to have to come up with mixed models and strategies and probably a lot of private-public partnerships and involvement of the community. So it’s going to look different, I think, than in other countries, and it’s going to have to be more complex.


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Life Insurance AND Long-Term Care Together?

To those who are looking for an alternative to long term care insurance, you can look into combination products or hybrid policies now. As stated in, this type of of policy perfectly suits those who are not satisfied with the traditional long term care insurance. The new insurance product works this way. You purchase a life insurance and choose long term care benefit as your rider. Once you’ve become eligible for long term care benefits, the amount you filed for claim will be deducted to your death benefit. When the inevitable happens and death comes, the remaining amount in your policy will be given to your beneficiary.

This combination product has been in the business for 2 years only and it’s already growing popularity at a very rapid rate. Well, it doesn’t come as a surprise anymore because this type of insurance is very efficient and economical. Just by purchasing one insurance, you can already get long term care and death benefit. If you’re still exploring your options, this is worth checking out.

The Life Insurance Center

Yes, you read that right! The life insurance industry has put together these two products. One major reason why many people (including me) never bought a long-term care insurance policy is that, if you never use the policy, you lose all the money that you invested in it. Can you afford to throw your money away?

Another reason is that, with a stand-alone Long-Term Care policy, the premiums can increase at any time – for any reason. Doesn’t quite give you that “warm and fuzzy,” does it?

Well, the Life Insurance and Long-Term Care policy addresses those and other concerns. For instance, if you pass away never having used the Long-Term Care part of the policy, that’s where the Life Insurance kicks in, and your family receives the tax-free death benefit. In my world, this is what we call “cost recovery.” Also, once you’ve been approved, your premiums remain the…

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