AND OPTIONS FOR PLANNING
Prepare for the future – Starting
early can make a big difference. LTC insurance premiums
are cheaper when you are younger. It also takes time to
set aside enough savings specifically for long-term care.
Those who include long-term care as an integral part of
retirement planning are likely to have resources to meet
their long-term care goals.
Transitions – Although we may be
aware of the need to plan ahead for long-term care, many
of us wait until some important life event, such as retirement
or death of a spouse, makes us take action. Others get an
“early warning” when they hear about a family
member or friend who needs care. For people in good health,
it’s not too late to transfer risk with private insurance.
Those who plan to rely on income and assets to pay for long-term
care need to talk with a financial or estate planner in
order to properly position their investment portfolio. Increasing
numbers of older couples are including LTC insurance as
part of their pre-nuptial agreements to protect their estates.
Imminent need – At this point, it’s
tougher to plan. And without substantial personal resources
to pay for care, there will be fewer choices and it will
be more difficult to protect your lifestyle. There are some
options when the need for long-term care is just around
the corner. For homeowners, reverse mortgages can be an
important source of cash. Family members and local community
programs may also offer assistance.
Crisis management – When long-term
care becomes a crisis situation, planning is difficult but
not impossible. Those with substantial savings may decide
to purchase an annuity to guarantee monthly payments to
cover long-term care expenses. Life insurance may also be
tapped. Government programs may be available to help people
with limited resources.
WHEN TO BUY LONG-TERM CARE INSURANCE
Since the need for long-term care typically arises late
in life, it is easy to procrastinate. Those who consider
buying private insurance often assume that they can save
premiums by putting off the decision. There are two reasons
why you should not wait to buy. First, the cost of buying
a LTC policy increases as you get older and are at greater
risk of needing care. In addition, your health (or the health
of your spouse) may deteriorate to the point where private
insurance is no longer an option.
Age at purchase
Years Life Expectancy
Annual Cost of LTC Insurance*
*For a 4 year comprehensive policy with inflation protection,
a 20-day waiting period, and a $100/day benefit. From HIAA
2003. These are average cost figures. Your premiums will
vary depending on the LTC policy you select.
Making it Happen...