LTC

When is the Best Time to Buy Long-Term Care Insurance?
by Tina Camiling

When is the best time to buy long-term care insurance? It’s a question people ask every day.

The answer is: Before you need it! While long-term care insurance may not be appropriate for everyone, the increasing costs of healthcare combined with the fact that people are living longer these days, means that most of us will need to stretch our retirement savings over decades. So, best thing to do is to have a plan.
A long-term care event could seriously affect our lives not just emotionally, but also financially. In general, private home care costs $38 an hour ($304 a day for an eight-hour day) – $110,960 annually, according to the Genworth Financial 2008 Cost of Care survey. Medicare typically only covers certain long-term care not to mention the fact that it has certain limitations and options.

Long-term care insurance typically covers the cost of the following:
• Help in your home with daily activities like bathing, dressing, transferring, and eating.
• Community programs, such as adult day care.
• Assisted living services that are provided in a special residential setting other than your own home. These services may include meals, health monitoring, and help with daily activities.
• Visiting nurses.
• Care in a nursing home.
No matter what your client’s age, a typical financial goal is to grow their hard earned assets and to take care of their loved ones – now and in the future. So let’s take a closer look at when long-term care insurance may make sense for clients.

Your 20s and 30s

These age groups are energetic, enjoying peak health and feel they’re invincible. It is a possibility that they have not even thought of life past age 40. While it could be a challenge to talk to them about long-term care needs, do review their portfolio when appropriate to solidly position themselves financially in the future.
Your 40s

The big 4-0
At this stage, retirement is becoming a reality. You start checking your positions in your retirement fund and start seeking a good financial advisor to maximize your investments. At this point too, you are more established in your career and your children are older – maybe reaching high school or college age.

Combined with caring for children, at this age, you may also have parents that need long-term care. Now the reality hits home about how long-term care affects families. At some point in the future, you may need long-term care. It would be smart to have a plan for such event.

Your 50s

The golden years. The kids are grown; you’re entering retirement; maybe you’ve even paid off your house and joined the ranks of AARP! Whether through personal family experience or from the experience of friends, you’ve seen how the need for long-term care can tap a family’s resources and the emotional burden it may bring.

As difficult as it can be, it’s time to think about it yourself and have the conversation with your spouse or loved ones about the need for long-term care insurance. Consider any health problems you have and how long your relatives tend to live. Be sure to consider any assets you plan to leave to heirs.

Just as important is the fact that it’s also time to consult with your financial advisor about your many options for long-term care and how to fund it. At this age, policies can be affordable and financed by leveraging your other assets. It is definitely brings a peace of mind once these risks are covered.

Your 60s

This decade is when people usually look into purchasing a long-term care insurance policy. If you wait until you’re in your 70s, you may face insurability and affordability issues. The older you get, the greater the risk that you will have health problems and become uninsurable or a long-term care insurance policy will be more expensive.

Your 70s

While it may be very expensive to buy LTC insurance at this stage, consider the cost of needing long-term care versus paying a premium for a policy. You will find that premiums for long-term care insurance are still less that paying for LTC care. Consider this: for a 70-year old man or woman, the average long-term care insurance policy may cost anywhere from $10,000 to $15,000 a year. This is a $200 a day, lifetime benefit standard rate policy.

Compare that annual premium with the average cost of long-term care expenses. In California, the average cost for long-term care can be anywhere from $75,000 to $100,000 a year! So while the annual long-term care insurance premiums certainly aren’t inexpensive, LTC insurance can give you the coverage you need at a significantly smaller cost than self-insuring – allowing you to safeguard a lifetime of hard-earned money.

There is No Right Age for LTC Insurance

So when should clients buy long-term care insurance? The answer is: before you need it! Factors such as, how much their net worth is; how much of their assets they’re willing to spend on healthcare; how much they want to leave to their heirs; marital status; and age all play a role in deciding the right time. For example, a client in their 40s with a family history of Alzheimer’s and longevity may want to consider purchasing a policy now. A high-net worth client who wants to control where they receive care and leave a large inheritance may be able to assume the larger premiums in his mid-60s.

One thing is certain and that is the uncertainty of life. With solid financial planning, including long-term care insurance, clients can be better prepared to assume risks of living a long and full life.
––––––––––
Tina Camiling is a long-term care insurance specialist for Leisure Werden & Terry, a brokerage general agency. With offices in Pasadena and San Francisco, the firm markets everal major life and long-term care insurance companies products. Ms. Camiling can be reached at (800) 272-2212 x237, or by email, tinacamiling@lwtagency.com.