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Financial Planning and Long Term Care Insurance
Risk. Every American must plan for the consequences of risk
becoming reality. Some risks decrease as we age, while others
increase. And we insure against these risks to protect our
families and our assets.
As Americans' life expectancies continue to rise due to the
benefits of modern medicine, the likelihood that we will need
long term care increases as well.
Despite the fact that long term care is a growing reality for a
number of Americans, particularly baby boomers, most are still
reluctant to ponder becoming old and infirm, let alone paying
for such care.
Now, more than ever, Americans should consider looking to
financial planners for advice regarding long term care
and the financial pitfalls they could face.
Asset Protection
In this context, the financial well being of baby boomers is
cause for particular concern. In addition to their sheer volume
(the number of elderly is expected to double to 77 million by
2030), the aging boomers face longer life expectancies and
dwindling social support programs to sustain their long term
care demands.1 Although studies indicate that baby boomers may
have saved enough for their retirement, it is evident that they
have not sufficiently prepared financially for their future long
term care needs.2
For those concerned about protecting their assets should they
ever need to enter a nursing home or assisted living facility,
purchasing long term care insurance is the best deal one can
make. Consider this: No matter what age you are now, if you were
to buy a mid-priced long term care policy, chances are you would
pay out less in premiums for your lifetime than you would for
just one year in a nursing home.3
The Financial Planning Market Today
The majority of long term care insurers continue to market
policies primarily to individuals. The number of providers in
this market remains limited, however, and therefore highly
concentrated. This could have a deleterious effect on premium
costs and accessibility to potential consumers. The HIAA
estimates that, at the end of 1996, only eleven sellers
represented approximately 80 percent of the individual policies
sold.4
Employers are beginning to offer long term care insurance as
part of their employee benefits packages, just as they offer
disability and retirement benefits. Yet there is still much to
be done. Despite the billions of dollars lost annually on both
sides--in missed days and decreased productivity--employers have
enjoyed very little success encouraging their employees to
participate. Of the firms offering long term care insurance in
their benefits packages in 1996, the HIAA estimates that less
than six percent of employees participated in the program.5
Public-Private Partnership
Government does play a role in the financing of long term care,
but only to a limited extent and only after strict conditions
are met. Contrary to popular belief, Medicare coverage for
nursing home care is limited. Medicaid covers more long term
care services, but in order to qualify, individuals must "spend
down" their assets to the poverty level.
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The private sector alone cannot realistically meet society's
entire long term care needs. There will always be a significant
need for government participation to ensure that a safety net
exists for society's most destitute. The American Health Care
Association is committed to working with Congress and other
policymakers to craft a viable public-private partnership that
will expand the availability of long term care insurance for
those who can afford it, while at the same time leaving the
social safety net intact and financially secure to meet the
needs of those who cannot afford long term care by themselves.
Some online resources for Long-Term Care Insurance include:
Allianz LTC Insurance
GE Long-Term Care
Insurance
John Hancock LTC Insurance
Long-Term Care Insurance from
MetLife
For the complete article click on Financial Planning and Long Term Care
Insurance.
About the author:
M. Sanders is a long term care insurance marketing specialist.
She is appointed throughout the United States as a long term
care insurance representative with several major insurance
carriers. Her website, About
Long Term Care and LTC Insurance, contains information and
articles pertaining to long term care, insurance and other
related senior topics. It is her goal to inform the public about
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