Posts Tagged ltc insurance
There are still some people who don’t welcome the idea of requiring assistance in performing their daily living activities thinking that they will remain healthy in the latter part of their lives. It is estimated that around 70% of people who are 65 years old and above will require assistance in eating, toileting, bathing and walking. This need can cost you a fortune if you don’t plan for this ahead of time. Experts advice everyone to purchase insurance products such as long term care insurance and combination products that can help them cover their future care expenses. Just like what Liz suggests, it’s best to discuss your needs to a professional advisor who can help you find the most fitting policy for you.
It’s easy to feel invincible when you’re healthy – and let’s hope you stay healthy for a long time. But what if the unthinkable happens and you become disabled or critically ill? Who would continue to provide the income that supports your family’s lifestyle and provide vital essentials like food and shelter?
There is a living benefits insurance that fits your needs and provides financial security for the tough times along with peace of mind for the good times.
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You made it. You are retired.
Your new job will be doing whatever you want! Sounds good, right?
Retirement can be a wonderful time. It’s a Life Event that usually happens to each of us at some point. Life Events are sometimes expected and other times a complete surprise. They often come with sudden wealth.
Retirement can come with the largest sum of money you’ll ever have to deal with. So it’s important that you make good decisions.
Understanding your retirement
Whether your retirement was planned, or shall we say, not planned, there will be many changes. You may want to discuss the details with your financial advisor, tax professional and attorney first. Here are a few things you’ll want to figure out:
Assess the retirement assets you have. I know I preach about financial planning, but retirement is an ideal time for it. It will help you get a complete picture of your retirement assets. You’ll need to know balances in your retirement plan from your former employer. You’ll also need to check the value of any IRAs you have. Do you have annuities, brokerage accounts or CDs? Include all of these as retirement assets.
Next, analyze your income and expenses. This is a critical step. Get a handle on what will be coming and going. Typically income as well as expenses go down in retirement, but that’s not always the case. Find out what sources of income you’ll have. Do you have a pension? Are you receiving any legal settlements or annuities? How much income will your portfolio produce?
Decide when to take Social Security. If you don’t need the income, then you may want to defer taking Social Security. If you wait till your full retirement age, you will receive 100% of the benefit. If you defer longer, then your benefit will increase. If your portfolio and other sources are not enough to cover your expenses, then you may need to take Social Security right away. Coordinate this with your spouse too.
Transitioning your portfolio for retirement. Sudden wealth from retirement can come with additional income, taxes and estate issues. You may have a very large rollover to deal with. Depending on whether you need income or not, you may have to change the composition of your portfolio. If you need income from your investments, then it will be less about growth. However, don’t invest too conservatively. You’ll still need a portion of your money in investments that can grow your portfolio over inflation. Work with your financial advisor to find the optimal balance of income and growth.
Other questions you may have
When do I have to take mandatory IRA distributions?
How can I generate portfolio income in a low-interest rate environment?
Do I need long-term care insurance? How much?
Do I still need life insurance?
Can I gift money to my children?
What will my taxes look like?
Will I be able to travel?
Perhaps the biggest question of all will be: Will I out live my money?
Retirement will be one of life’s most exciting and challenging events. If you just retired and are staring down the barrel at all these decisions, it may be time to do a little planning. The more chaotic life seems, and the more complex the decisions, planning will give you the clarity to make good choices.
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When it comes to money, most people get emotional. Making financial decisions is tough for many people.
When you buy a house, it is usually fun and exciting! When you purchase an auto or homeowners insurance, it may be frustrating, as you feel it is way too expensive.
One of the hardest financial decisions to make in your life is whether to purchase Long-Term Care (LTC) insurance. LTC insurance pays for a nursing home or home health care aid when you need additional medical care.
The reason that it is difficult to make this type of buying decision is because there are a lot of feelings and emotions involved related to aging and illness. In addition, it is emotional because of the amount of money that might be needed for this type of medical care.
Do you know someone who is currently in a nursing home or receiving care at home? Have you had to clean up after a parent that didn’t make it to the bathroom on time? How will your family feel about taking care of you when you are sick and need help? Do you think LTC insurance is too expensive and don’t want to part with the money?
Recently a friend whose mom is 80 years old and has had numerous illnesses over the years contracted a bacterial infection. The infection started with a trip to the emergency room and a four-day hospital stay. Mom was then sent home to recuperate, even though she was still in pretty bad shape. The illness was so bad that my friend had to stay home from work for several days to take care of her mother.
While she loves her mother, my friend quickly realized that taking care of mom was a lot harder than expected. It was uncomfortable to help her with bathing. It was aggravating to have to do all of the things that mom did for herself before she was sick. Watching her mom in pain was very difficult and she did not feel equipped to take on this responsibility.
While staying at home, new considerations came into play. How much vacation and sick time would she have to use up that she had earmarked for a family vacation? Would mom be better off in a nursing home with closer supervision? Would a home health care aid be sufficient? How much would a person that specializes in senior care cost? What is mom going to think about all of this?
When it comes to caring for a loved one who needs additional medical care, it’s not easy. The cost of care has skyrocketed, and the average cost of a nursing home is more than $200 per day nationally. Rates for a home health caregiver are over $20 per hour. These fees add up quickly.
If you are over the age of 50 in good health and haven’t considered buying LTC insurance, then you should put yourself in the shoes of my friend. Ask these questions and determine what you would want to happen if you should become ill and aren’t capable of taking care of yourself?
While paying for insurance that you may never use feels like a waste of money, what if you eventually have to pay for a nursing home? If you do get sick, how will everyone feel knowing that the finances are mostly covered? Conversely, how will you feel if you didn’t purchase LTC insurance when you had the money to pay for the insurance?
When considering purchasing LTC insurance, be aware that it will be emotional. However, having to pay for a nursing home is both emotionally and financially painful. Sometimes spending the money up front for long-term care is well worth not having to go through the emotional and financial drain of paying for this care out of your pocket. Think about it now so that your loved ones won’t have to deal with it later!
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In this video, Grace Herrington explains what long term care insurance is, and why you should have it. If you have assets you want to protect and want to provide for you and/or your family in the future, then long term care insurance might be a wise investment.
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It shouldn’t come as a surprise that health care costs are among the leading concerns on people’s minds when nearing retirement.
The average couple retiring in 2014 can expect to pay $220,000 to $240,000 in health-care costs during the course of their retirements, according to a new estimate from Fidelity Investments. As if this weren’t scary enough, lost in the fine print is the fact that this figure doesn’t include long-term care.
Long-term care costs can vary widely by type of care and location. A single room at a nursing home facility will cost on average close to $88,000 a year, with a typical stay of approximately four years. Part-time in-home care by a home health care practitioner will cost considerably less. Regardless, everyone should have a long-term care plan in place. Are there ways to prepare for these variable and unpredictable costs?
The good news is that there is long-term care insurance (LTCI), and like any insurance, it’s cheapest to buy when the insured event is more likely further in the future. In other words, buy early.
Traditionally, LTCI was best suited for those with a net worth between $250,000 and $2 million. This group could afford LTCI premiums and had significant assets to protect for their family. Also, they didn’t possess adequate resources to self-insure. For individuals with net worth above $2 million, the general rule was to self-insure. Today, in light of rising long-term care costs and people living longer, this traditional approach to long-term care coverage warrants re-evaluation. In fact, everyone should at least consider LTCI for one or more of the following reasons:
1. To avoid being a burden
None of us want our future health-care needs to create a physical or emotional strain on family members. This is true regardless of net worth. And this emotional side in particular is one of the leading reasons high net-worth individuals consider long-term care insurance.
One way to reduce family “burden,” even the psychological impact, is to have long-term care benefits available. For some, such benefits mean a greater range of options. Families with long-term care coverage tend to seek outside professional help sooner and with less family conflict. In addition, opportunities are enhanced to remain at home with professional in-home care.
According to the American Association of Long-Term Care Insurance, over 50% of long-term care insurance benefits in 2011 were paid for in-home care. Most people prefer to stay in the comfort of their own home as long as possible. LTCI benefits often allow this to happen as professional in-home care can be started sooner and provided at a higher level.
2. To protect family finances
Individuals work a lifetime to accumulate assets. They build a net worth and spend considerable dollars protecting assets against taxes, estate costs and family issues. They plan for a happy and healthy retirement and hope to leave an inheritance to their family. However, many fail to plan for long-term care costs.
Why is this? Some are unsure where to start the process, or hope family members will help when the need arises. Others believe premiums are too cost prohibitive. In 2012, AARP stated, “high premiums keep most people from purchasing insurance. Yet, for those who own long-term care insurance and receive benefits, the policies pay for a significant portion of care received.”
This creates a financial dilemma. People want and need the long-term care benefit, but are unsure if the premiums are worth it, especially if cash flow is tight. Fortunately for high net worth families the cost of premiums is less likely to cause significant burden in their annual cash flow. Premiums may also be partially tax-deductible, which makes the insurance even more cost-effective. For these reasons, long-term care insurance should at least be considered as one part of a comprehensive strategy to protect family assets.
A couple with a net worth of $1 million could spend their life savings very quickly if they have to cover the cost of a severe illness. For example, with one spouse in a long-term care facility for Alzheimer’s and the other living at home, in four to five years the couple could easily deplete their entire savings.
3. To provide liquidity
Some business owners have significant net worth, but minimal liquidity and cash flow. Farmers, for example, may have high land value assets, but the majority of their cash flow goes back into the operation of the farm. Other business owners may hold significant wealth in non-income producing assets, or assets that are difficult to sell due to tax consequences or an illiquid market. In these situations, long-term care insurance can reduce out-of-pocket health care expenses and protect cash reserves for day-to-day living and business costs.
4. To obtain peace of mind
As stated earlier, most people purchase long-term care insurance for emotional reasons. Numbers and dollars are important, but so is peace of mind. With a net worth over $2 million it may be possible to self-insure, but that doesn’t mean these individuals want to self-insure, or that it is the best solution for their situation.
Most affluent clients built their wealth by understanding risks and planning accordingly. They understand the importance of numbers, but also rely on emotional clues and input to make wise choices. This same approach is advisable when considering long-term care insurance. Each individual or family must look at the risks, costs and benefits involved, and then determine if long-term care insurance is a smart way for them to achieve peace of mind.
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Typically, it is a parent’s job to secure his children’s future. But you, as a son or daughter, may have felt concern over what your parents’ life would be like once they grow frail and need assistance in their day to day activities. If you want to ensure that they’re taken care of years from now, you can buy long-term care insurance for them.
How can I get a policy for them?
First off, you need to get their consent before you can purchase a policy under their name. Since coverage is intended to protect them, the policy will be named to them and not you. Likewise, they will be the one to sign on the policy.
Once they agreed, they will go through the usual qualification and underwriting process. Typically, the company will ask for your parent’s medical records and may ask them to undergo a medical screening. The younger and healthier they are, the higher their chances of getting qualified.
Factors to consider before purchasing a policy for your parents
Before you purchase a policy for your parents, here are things that you need to consider and discuss as a family.
- Your parent’s age – Remember that age plays a crucial role in long-term care insurance. It’s advisable to buy coverage for your parents as they approach their 60s. This way, their chances of qualifying is still high and their health is still likely in a good state, thus, you can expect a lower premium. Meanwhile, if they are old and showing signs of a frailer health, they can be imposed a higher premium or worst, be denied of coverage. That’s why it’s not advisable to wait for a crisis before you purchase this coverage.
- Financial capability –Look into your financial strength as well as your parent’s. Determine if you’ll shoulder the cost of long-term care insurance completely or if they have the ability to share the bill with you. Keep in mind that you need to be devoted in paying the premiums to ensure your parent’s coverage. That’s why it’s important to discuss about your financial resources before you decide to buy. Meanwhile, if you have siblings, ask them how much they are willing to pitch in for the policy.
- Location – Will you buy long-term care insurance in your state or in your parent’s? Be clear on this area as care services vary from state to state, thus, how high the premiums will be is highly dependent on this. If your parents receive care close to their home, the familiar surroundings can be beneficial to their wellbeing. Meanwhile, if they are cared for in your state, you can easily visit and ensure that they are getting the best quality of care.
As you plan to buy long-term care insurance for your parents, keep in mind that it is a family thing. Involve every member in the whole process—from planning, acquisition and coverage. Getting a policy for your parents offers a win-win situation. It is beneficial for them as they can retain their independence and quality of life even if they are receiving care. On your end, your parents’ care requirements will not get in your way as you continually pursue the life you want because the policy already have them covered.
According to the Department of Health and Human Services, 60 to 70 percent of Americans who are 65 years and older will need long-term care. However, a Metlife Mature Market Institute Study found that only 9 percent of Americans own long-term care insurance.
For those unfamiliar with the type of insurance that focuses on long-term care, it pays benefits when a person becomes unable to care or do basic day-to-day task for themselves.
Why the majority of Americans put off planning for long-term care is certainly up for debate, but some of the causes include people’s distaste for considering that they someday might need to rely on another to accomplish basic tasks.
However, not preparing for long-term care can have drastic effects in the future such as ending up with depleted savings due to care-related expenses, according to experts.
To help you understand what long-term care is about, here are six things that’s essential to know. Recognizing these facts will help you prepare for one of the biggest challenges that you can face later on in life. Here are the 6 things you need to know about long-term care.
1. Government programs provide limited coverage for LTC.
Generally, Medicare don’t pay for long-term care, but what it covers is a 100-day stay in a nursing home following at least a three-day stay in a hospital. Medicaid, on the other hand, covers long-term care but on a condition that a person’s assets is not more than a specific limit, which today is $2,000. Also, the two programs offer limited coverage as they only pay for accredited facilities. Home care, on the other hand, is seldom covered by this program.
2. The cost of long-term care is ever increasing.
In 2013, the annual average cost of staying in a private room in a nursing home is $83,950, as per Genworth’s Cost of Care Survey, but for 2014, the annual median cost has escalated to $87,600.
The cost of long-term care is expensive and it’s not showing signs of going down in the years to come. In fact, the five-year annual growth in cost of the different care settings and services are as follows:
- Homemaker services – 1.20%
- Home Health Aide Services – 1.32%
- Adult Day Health Care – 3.40%
- Assisted Living Facility – 4.29%
- Semi-Private Room in a Nursing Home – 3.91%
- Private Room in a Nursing Home – 4.19%
Based from these statistics, an event that warrants long-term care services can easily deplete a lifetime of savings. Since this is the case, you need to determine how your possible care expenses will be covered. Experts say you must investigate how you can become insured under long-term care insurance.
3. Long-term care is not just about nursing homes.
Most long-term care insurance policies issued in the past only covered nursing homes, but today the product has evolved to cover a wide variety of care services because the majority of Americans wants to receive care in their own homes.
Clearly, long term care is not just about nursing homes. In fact, it involves care services given in the home or in other community-based settings. You have a lot of options on where and how you will receive care. It’s just a matter of knowing what these are and deciding which one is best for you and your family.
4. LTCi is expensive, but it can be made affordable.
There are several ways to make long-term care insurance fit to your budget. One is buying coverage while you’re still young, preferably during your 50s. At this point, you can lock in lower premiums as well as discounts for simply being healthy. Purchasing a specific benefit duration can also lower your premiums, as opposed to buying a lifetime coverage. In addition, you can also opt for a longer elimination period (the time before payments begin) in order to lower the cost of your coverage.
5. Family members can provide care, but it also comes with a cost.
Care provided by family members remains a large source of long-term care. More 10 million individuals who are over 50 provide care to their elderly parents, according to government statistics. As family members provide for the care requirements of their loved ones, they also experience financial hardships. In fact caregiving for a loved one resulted to lost wages amounting to $324,000 for women and $283,000 for men.
6. Long-term care is not just an issue for seniors.
Statistics show that 40 percent of individuals who receive long-term care are between 18 and 64 years old. Clearly, even those who are in the younger age groups are still at risk for needing long-term care. It may be due to medical conditions or injuries resulting to physical activities or accidents, but someone does not have to be older to need long-term care.
So, anyone can experience an event that will warrant long-term care services and this is the key reason to plan for long-term care ahead of time.