By Lane Reynolds
When we’re young, we think we’ll live forever. But as we age, we begin to understand the reality that our time on earth is limited. This may be a sobering thought (and not the most fun topic to dwell on), but it’s nonetheless important to plan and prepare for this eventuality. Just as we plan for our children’s college education, weddings, and retirement, we must also include long-term care insurance in those plans. With an estimated 7 out of 10 people aged 65 or older needing long-term care, not doing so is simply unwise.
So, where do you begin when looking to incorporate long-term care (LTC) insurance into your overall financial plan? There are many details involved that most people don’t think to consider. To help you make the most informed decisions, we have compiled a list of the important factors you need to know to get started.
Misconceptions About Long-Term Care
Before we discuss what you need to know about LTC, we first need to dispel some of the misconceptions about this type of insurance. First of all, employer-sponsored health insurance plans do not cover long-term care expenses, or only cover the same limited services as Medicare. While Medicare may cover a portion of long-term care costs, the maximum time frame is up to 100 days and requires a three-consecutive-day stay in a hospital under treatment, as well as other qualifiers. Medicaid also covers some long-term care expenses for individuals with countable assets of $2,000 or less (varies by state), and care may be limited to a nursing home. What’s more, none of these types of insurance cover assisted living facilities (the national average cost per year: $57,289), continuing care retirement communities, or adult day care services. Now you can see why it’s important to start planning now for the future long-term care needs of you or your loved ones.
Protecting Your Assets
Now that you understand the need for LTC and that it’s not covered through your other insurance plans, it’s time to start looking into your options for adding this coverage to your overall financial plan. Consider the following when shopping for LTC:
- Cost of care: What type of care will you need, and how much will it cost?
- Life span: How long will you need care? Women typically need care longer than men.
- Inflation: How will inflation affect the future cost of care?
- Market volatility: What if you need to begin paying for care at a time when the markets are down?
- Accuracy of calculations: Are you confident in the amount you’ve set aside for care?
Features to Consider
Once you have answered the questions above, or at least have a general idea of what your family’s needs will be, you can start narrowing down your options. When looking at the various insurance providers and what they do and do not cover, there can be a lot of information to wade through. Here is a list of some common features you will find:
- Care types available
- Single or joint life
- Traditional or asset based
- Benefit term (how long is the benefit paid?)
- Cost
- Annual premium, single premium, or limited pay premium
- Premium guarantees
- Reimbursement or indemnity
- Inflation protection
- Waiting period
- Death benefit
- Shared care
- Qualifications for the benefit
Sorting through all this information can be a bit overwhelming. That is when having a trusted financial advisor on your side, one who knows your situation and understands your family’s needs, can prove very beneficial.
Your Long-Term Care Plan
While the cost of long-term care insurance may seem like just another (potentially) unnecessary expense, the comfort of knowing that you or a loved one will be cared for in every season of life is priceless. It’s equally important to talk to your loved ones about their long-term care plans to make sure everyone is on the same page. The care of our elderly loved ones often falls on informal caregivers (family members, friends, neighbors, etc.), so plans often go much smoother when everyone is informed and knows what to expect.
If you would like help navigating this sensitive (and at times emotional) subject, we would love to help guide you through all your options. At ABLE Financial Group, we are experienced and trusted advisors who can take the guesswork and stress out of financial and long-term care planning. Together, we can create a plan that makes the most sense for you and your family, given your specific financial situation and physical care needs. To learn more about our team and the ways we can help guide you, call Lane at (480) 258-6104 or email him at lane@ablefinancialgroup.com.
About Lane
As a Senior Financial Advisor at ABLE Financial Group, Lane Reynolds works closely with individuals and small businesses to help them plan and invest for the future. He has personal and practical experience in helping his clients navigate the financial complexities of retirement, marriage, divorce, disability, death of a loved one, paying for higher education, changes in employment, and long-term healthcare issues. He focuses primarily on risk management strategies, long-term care, disability, insurance, and annuity-related products. Above all, Lane recognizes and values the personal nature of what he does for his clients, and he appreciates the trust and respect needed in the advisor/client relationship.
Lane is a 1985 graduate of Brigham Young University, earning a degree in Business Management with an emphasis in Finance. While he values his formal education and securities registrations, he also takes great pride in the knowledge and practical education that comes from being in the financial services industry for nearly 35 years.
Lane grew up in Mesa and now lives there with his wife, Melenie. They have five children, who Lane loved supporting in their endeavors either as their coach and instructor or as a spectator and their number one fan. Lane and Melenie are also proud grandparents and enjoy watching their family continue to grow.
They have served on their local high school booster club, helping raise funds for the athletic and music departments. They are also both active in their church and are regularly involved in humanitarian and charitable projects. Lane has also served as a volunteer leader and Scout Master in the Boy Scouts of America. In his spare time, he enjoys golfing and being outdoors.
