Talked the Venice (FL) Gondolier into publishing the occasional business column. From January 30, 1999. – JDW
LONG-TERM CARE INSURANCE COMPLETES YOUR FINANCIAL PLAN
I will never forget my first home visit as an insurance agent. A couple in a prestigious gated community, Lincoln Continentals in every other driveway, wanted to upgrade a policy they had purchased a year earlier. The man of the house greeted me at the door, his wife was on the phone. While we were waiting for her call to end, we engaged in some small talk. It’s called ‘the warm-up.’
I asked the man, a handsome sturdy golfer, how old he was. He looked at me vacantly. Didn’t know how old he was, couldn’t remember his birthday.
A few minutes after the Mrs. joined us, she sent her husband for a calculator; he returned with the television remote control.
“I’ll be perfectly honest with you,” she said. “My husband’s mind isn’t what it used to be.”
“Ma’am, I’ll be perfectly honest with you,” I replied. “I noticed.”
Does your financial portfolio include a long-term care insurance policy?
You’ve insured your home, your car, your health, even your life. You have carefully planned your savings and your investments.
Yet all of your plans could come crashing down, a lifetime of dreams and hard work wasted, if you or your spouse need long-term care.
Long-term care insurance completes your financial planning.
Only one of 1,200 people will ever use their fire insurance. Only one of 240 people will ever use their automobile insurance. Experience shows that one out of every two people age 65 and over will spend time in a nursing home at some point in his or her life.
Every married couple can realistically expect either the husband or the wife to eventually require long-term care.
At an average cost of $41,000 a year, it doesn’t take long to wipe out a family’s assets. Generally, both spouses should be covered, so a nursing home stay by one will not deplete the assets of the healthy spouse. The best long-term care policies offer a spousal discount, up to 15 percent.
Regardless of your age at the time you purchase long-term care insurance, the total cost of the policy will be less than the cost of one year in a nursing home. Figure it out. Say you are 64-years-old at the time you begin coverage. Adequate benefits with a reputable insurer can be purchased for say $2,000 annually. And you don’t enter a nursing home you are age 84. You will have paid $40,000 in premiums and that’s probably less than what your insurance company will pay for just one year of care.
In only a single year, you get a complete return on your investment. The next year, and every year thereafter, you’re (nursing) home free.
And you don’t have to be Alan Greenspan to figure out that nursing home costs will skyrocket in the next couple of decades. The inflation rate for medical expenses has frequently been three to five times greater than the general inflation rate.
The best LTC policies offer inflation protection, but those inflation fighter options are prohibitively expensive.
The more practical solution is to maximize your daily benefit.
The insurance industry is continually improving its products. If you purchased a long-term policy more than a couple of years ago, compare your existing coverage with a newer policy. Often you can get more comprehensive coverage at a lower cost.
What does it take to convince some people they could easily end up in a nursing home. And over 20 percent of all people who go to a nursing home stay five years or more.
The odds are higher that home care will be needed since 80 percent of long-term care occurs at home or in the community. So, make certain any policy you purchase covers home health care at the same level as nursing home care.
In Venice, for example, an unskilled home health aide, someone to help with dressing and bathing, cleaning and cooking, will cost about $15 an hour.
Although Medicare includes a home healthcare benefit, it includes only medically necessary home visits, and then only if the care is part-time skilled care.
Medicare won’t help you with toileting or washing the dishes.
Most people are, unfortunately, in denial. Today, 1,500,000 senior citizens live in nursing homes and I’ll bet my Dad’s teeth, none of them ever wished to be there.
You owe it to your self and your family to plan for your future now while your health is good and affordable coverage remains an option.
My mother has a long-term healthcare insurance policy.
And she paid retail.
[Actual Gondolier editor’s note at end.]
Jack Welch is a licensed insurance agent with Bankers Life and Casualty in Sarasota.
He is a resident of Venice and was a journalist in Oregon for many years before moving to this area.