Do We Honestly Need Longer Term Insurance?
Many of us Baby Boomers had to look after our folks and have experienced the awful fiscal and emotional effects as they have been forced to use a lifetime of savings and investing to pay for terribly pricey (and required) long-term care costs. Long-term care insurance is a subject that should be examined as you plan for your retirement.
Many people would like to prevent this topic, but Government statistics prove that almost 70 p.c of us past the age of 65 will need some sort of long-term care help. This is a hard fact! The worrying monthly cost of long-term care assistance doesn't make it any easier: Basic assisted living - $1,800 per month. Retirement home - $5,833 per month. And full"time home care - $12,960 every month (source: "Financing Long Term Care for the Elderly," a congressional budget office paper, April 2004).
Who should invest in long term care insurance? I would like to recommend that anyone with assets (excluding their home) of a $100,000 or even more consider the benefits of a policy. This is usually best done with your finance counsellor and his/her insurance advisor. I might also recommend using info sources such as AARP to help decide if a long-term care policy would be of benefit to you in your particular situation. Remember, this is not an one size fits everyone situation. There are many factors to consider like availability and amount of liquid and non-liquid assets, health factors (can you qualify?) and very importantly, are you able to afford it? Usually, it is best to analyze long-term care policies between the ages of 50 to 65.
Premiums will go up based on your present age and health history. Most of us develop health worries as we mature and many of these non-life threatening issues that won't disqualify us for a life insurance policy will disqualify us for a long-term care policy. Some of the primary advantages of long-term care insurance are that you spend cash now to look after potential costs at later. The buck spent today will purchase multiple greenbacks of coverage when the requirement arises.
The amount of these leveraged dollars depends on various factors like your age, current health condition, and the policy features and riders. As an example, a healthy 65-year-old female who pre-pays a policy with a $100,000 one time premium payment would have up to $500,000 of coverage should the requirement appear (coverage will vary depending on companies and categorical policy features). Additional features on some policies are a death benefit or a return of premiums paid should the policy holder decide they no longer want the policy (various policy conditions may exist).
If you make a decision to analyze the advantages of a long-term care policy and you and your financial/insurance advisors decide this is the best plan, there are still many calls to be attended to such as: what is the best way to pay for the policy (single premium, monthly payments etc) and where should the money come from or what are the sources of funds? One of the strategies that is now being looked at by some seniors is exploiting some of the equity in their houses to get a long term care policy. For example, if you're 62 years old or older, own your home and have adequate equity, a reverse mortgage could be a practicable alternative. In this situation, money can be accessed from the reverse mortgage (cash that doesn't have to be repaid so long as the borrower lives in his/her home) that will enable the borrower to pay for his/her long-term care policy and not need to pull cash out of the current household budget.
I recommend a full investigation of the advantages and drawbacks of reverse mortgages. Remember, everybody's situation is different and this may or may not be the simplest way for you. Another possibility is to reposition existing monetary assets. For instance, if you've a $100,000 Certificate of Deposit that's being held for emergencies like a long-term care need, you could use that CD to pre-pay a long-term care policy. That $100,000 may purchase many times this amount in long term care benefits. Again, these examples should be discussed with your finance consultant.
If you have sufficient assets to guard, there are only two kinds of insurance. One, you self insure and you pay for everything until you spend down the majority of your liquid assets - then you may be fit for Medical. 2, you buy long-term care insurance. These are only some of the many. Eventualities and you should usually check with your financial consultants before buying insurance or making long term financial choices.
Many people would like to prevent this topic, but Government statistics prove that almost 70 p.c of us past the age of 65 will need some sort of long-term care help. This is a hard fact! The worrying monthly cost of long-term care assistance doesn't make it any easier: Basic assisted living - $1,800 per month. Retirement home - $5,833 per month. And full"time home care - $12,960 every month (source: "Financing Long Term Care for the Elderly," a congressional budget office paper, April 2004).
Who should invest in long term care insurance? I would like to recommend that anyone with assets (excluding their home) of a $100,000 or even more consider the benefits of a policy. This is usually best done with your finance counsellor and his/her insurance advisor. I might also recommend using info sources such as AARP to help decide if a long-term care policy would be of benefit to you in your particular situation. Remember, this is not an one size fits everyone situation. There are many factors to consider like availability and amount of liquid and non-liquid assets, health factors (can you qualify?) and very importantly, are you able to afford it? Usually, it is best to analyze long-term care policies between the ages of 50 to 65.
Premiums will go up based on your present age and health history. Most of us develop health worries as we mature and many of these non-life threatening issues that won't disqualify us for a life insurance policy will disqualify us for a long-term care policy. Some of the primary advantages of long-term care insurance are that you spend cash now to look after potential costs at later. The buck spent today will purchase multiple greenbacks of coverage when the requirement arises.
The amount of these leveraged dollars depends on various factors like your age, current health condition, and the policy features and riders. As an example, a healthy 65-year-old female who pre-pays a policy with a $100,000 one time premium payment would have up to $500,000 of coverage should the requirement appear (coverage will vary depending on companies and categorical policy features). Additional features on some policies are a death benefit or a return of premiums paid should the policy holder decide they no longer want the policy (various policy conditions may exist).
If you make a decision to analyze the advantages of a long-term care policy and you and your financial/insurance advisors decide this is the best plan, there are still many calls to be attended to such as: what is the best way to pay for the policy (single premium, monthly payments etc) and where should the money come from or what are the sources of funds? One of the strategies that is now being looked at by some seniors is exploiting some of the equity in their houses to get a long term care policy. For example, if you're 62 years old or older, own your home and have adequate equity, a reverse mortgage could be a practicable alternative. In this situation, money can be accessed from the reverse mortgage (cash that doesn't have to be repaid so long as the borrower lives in his/her home) that will enable the borrower to pay for his/her long-term care policy and not need to pull cash out of the current household budget.
I recommend a full investigation of the advantages and drawbacks of reverse mortgages. Remember, everybody's situation is different and this may or may not be the simplest way for you. Another possibility is to reposition existing monetary assets. For instance, if you've a $100,000 Certificate of Deposit that's being held for emergencies like a long-term care need, you could use that CD to pre-pay a long-term care policy. That $100,000 may purchase many times this amount in long term care benefits. Again, these examples should be discussed with your finance consultant.
If you have sufficient assets to guard, there are only two kinds of insurance. One, you self insure and you pay for everything until you spend down the majority of your liquid assets - then you may be fit for Medical. 2, you buy long-term care insurance. These are only some of the many. Eventualities and you should usually check with your financial consultants before buying insurance or making long term financial choices.
About the Author:
Steve Goldmann is a finacial health expert who avoids jack3d side effects by employing Neuro Linguistic Programming.