By Rick A. Fisher, MS, CFP®
In “Medicare And You 2018”, Medicare reported that 70% of Americans 65 or older will need long-term care in their lifetime. With the average cost of a private room at a nursing home in California at $300 per day, and the average stay for non-Alzheimer’s patients at just over two years, many of us will have to come up with over $215k for care. For patients with Alzheimer’s, that cost could easily double. Unlike auto and home insurance which are pretty much mandatory, Long-Term Care insurance (LTCi) is still optional. However, if you look at it from a risk/reward standpoint, it should be the most desired insurance for Americans ages 50-70. In the twenty-plus years that we have been offering LTCi, the biggest hurdle to purchasing this valuable insurance is the cost. Fortunately, in the past few years, the numbers of options to purchase long-term care has increased. There are now products to fit almost any budget that will cover at least part of the risk.
Let’s consider the situation for two fictional couples: the Millers and Smiths. Both couples are in their mid-50s and in good health. The Millers have a substantial net worth and a large amount of liquid investments. Their parents both lived long, healthy lives without needing any long-term care. Their biggest concern is to pass on assets to their heirs. A universal life policy with a long-term care rider is a life insurance policy that will pay for long-term care costs; should the insured die before they need long-term care, then it pays out like a life insurance policy. By using a portion of their liquid investments, the Millers converted $100,000 into $250,000 of death benefit and $400,000 of long-term care benefit.
The Smiths’ perspective regarding long-term care is different than the Millers’. Mrs. Smith’s father needed skilled nursing care in a long-term facility. With no insurance in place, the financial burden became overwhelming. The Smiths could not plan to rely on their savings to cover any potential long-term care costs, so we focused on finding the right insurance product to fit their budget and reduce the risk as much as possible. By utilizing a traditional-term LTCi policy with a reasonable annual premium, the Smiths successfully protected nearly all of the $240 average daily cost. The moral of the story? Get current information on the pros and cons of Long-Term Care insurance relative to your specific circumstances. Research all the new options available. Long-Term Care insurance might be expensive. Being without long term care, can be devastating. Call us for a consultation and let’s check your needs before it is too late!
The opinions voiced in the material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your financial advisor prior to investing.
This material contains only general descriptions and is not a solicitation to sell any insurance product or security, nor is it intended as any financial or tax advice. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally, and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation, or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice, you should consult an insurance professional. You may also visit your state’s insurance department for more information. Riders are additional guarantee options that are available to an annuity or life insurance contract holder. While some riders are part of an existing contract, many others may carry additional fees, charges and restrictions, and the policy holder should review their contract carefully before purchasing. Guarantees are based on the claims paying ability of the issuing insurance company.
Frederick Fisher is a Registered Representative with, and Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Ostrofe Financial Consultants, Inc., a Registered Investment Advisor and separate entity from LPL Financial.
For questions or suggestions, contact Frederick at (530) 273-4425, or email@example.com, or visit ostrofefinancial.com. Branch address: 420 Sierra College Drive, Suite 200, Grass Valley.