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Long-Term Care Insurance, Part 2: Pros and Cons

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In our last blog post, we discussed several important factors to consider in regards to Long-Term Care Insurance (LTCI). It’s one viable choice for being ready, in the event that you or your spouse should ever need long-term care in the form of custodial care at home, or skilled care in a nursing facility. At Phelps LaClair in Chandler, Mesa, and Phoenix, we’re interested in helping you know what your options are, and which course of action is best for you. For starters, let’s look at the pros and cons of Long-Term Care Insurance.

PROS

Consider Your History—If your family history involves numerous situations where relatives have spent significant lengths of time in a skilled nursing facility or needed custodial care at home, you might be a good candidate for LTCI. Paying into a monthly policy that provides comprehensive care (up to 5 years) in a nursing facility could work for individuals whose family history shows evidence of needing long-term care.

Peace of MindOne article told of a woman who paid LTCI premiums for years and never once used her policy. She was healthy for her entire life, except for a few days in the hospital before she passed away at the age of 87. In all, she paid a total of $63,066.00 for premiums, but since her LTCI policy included a waiting period of 20 days, the benefits for the policy were never used. Her 55-year-old daughter was as healthy as her mother and wondered whether she should consider LTCI for herself. Surprisingly, the financial advisor leaned toward recommending LTCI for this reason: the daughter was feeling rather uneasy about not carrying LTCI and was hesitant to risk going without it. Like this daughter, who had the financial means to pay for LTCI, having peace of mind can be one reason to consider long-term care insurance, especially if you’re able to choose a policy that pays heftier premiums for the first 10 years, and afterwards locks in a monthly premium that cannot be raised.

Costs for Long-Term Care—The average national cost for one year in a skilled nursing care facility is $92,378.00. For that reason, Long-Term Care Insurance could be a wise investment, especially knowing that the average stay in a skilled nursing facility is more than two years. In the case of longer stays, purchasing LTCI could prevent the loss of significant inheritance monies that you desire to pass on to your heirs.

CONS

Expense for Long-Term Care Insurance—As mentioned in our last blog post on LTCI, depending on your policy, out-of-pocket costs for monthly premiums can range somewhere between $2,300.00 and $5,600.00. As you grow older, know whether your monthly income can sustain that kind of monthly outlay. If not, LTCI may not be your best option.

Premium Increases—Insurance companies can request increases from a state’s insurance commissioner. In Arizona, one company’s request (Genworth) was approved in 2017, and now Genworth clients are experiencing as much as 30% rate increases. Clients in other states have it even worse, with some rate increases jumping much higher.

Family Care—It’s possible that end-of-life challenges may be successfully handled by family members who have expressed a desire to contribute to your care in old age. Their commitment to see to your custodial care needs can go a long way in foregoing any need for LTCI. In times past, family care for elderly members was an assumed part of family dynamics. But in today’s cultural busy-ness, if you choose to lean on this option discuss it first with your children and be sure you understand their desires and their level of commitment to your future care.

Wealth—If you’ve been able to set aside significant financial assets, rather than purchasing a Long-Term Care Insurance policy, you may be able to pay for long-term care from your personal income. In that case, other options for preparing for long-term care may better fit your needs, like purchasing a life insurance policy to serve as your children’s inheritance in the event that you use your own resources for Long-Term Care for you or your spouse.

Considering Your Options

Long-Term Care Insurance is just one option for setting a plan in place. When it comes to preparing for Long-Term Care, each person’s situation is different. Your financial portfolio, your family’s ability and willingness to help, and your family history are just a few of the details that need to be considered. If you’re interested in understanding what’s best for you, we will be glad to meet with you, take a look at your financial portfolio, and give you counsel based on our more than thirty-five years in the business of estate planning: and that includes our knowledge of elder law and elder care. We’re Phelps LaClair, serving the Phoenix Valley. We care about family, and we care about leaving a legacy to succeeding generations.

 

Images used by creative commons license (Commercial Use) 8/31/18) Photo by Samuel Zeller on Unsplash

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