by Chris Coudret April 18,
2017 at 08:00 PM
When it comes to LTC protection, it’s
time to know the myths, master the facts, and have the conversation.
Retirement readiness risks come in all shapes and sizes,
and few loom larger than the potential cost of long-term care (LTC). Most
financial professionals understand the magnitude of this risk; however,
preparing clients to address LTC costs often means overcoming a set of
well-entrenched myths. Understanding some common myths in advance and becoming
well-versed in the facts can change the course of the conversation. And most
importantly, it can help create a stronger retirement strategy for clients at a
range of income levels.
Myth: “My health insurance
provides all the protection I need for long-term care.”
Fact: Health insurance and long-term
care protection are not interchangeable. Health insurance helps cover
the cost of medical care, while LTC benefits help pay for other potentially costly
services, including help with eating, bathing and getting dressed – services
that are generally progressive, with the level of care growing over time.
Myth: “I can rely on a
government program to take care of me.”
Fact: Government programs are limited
by financial resources and availability. It can be difficult to qualify
for government programs, and each program carries specific rules and
requirements for covered services.
Myth: “LTC protection is
something only old people need.”
Fact: It’s never too early to protect
your future. Applying for LTC protection at a younger age can mean
lower premiums, and it can improve an individual’s chances of getting approved
for a policy or a contract. Waiting to purchase protection may increase the
risk of paying higher age-based premiums or even being declined. And it’s
important to remember that roughly 70 percent of Americans ages 65 and older
will need some kind of help with the activities of daily living as they age.
Myth: “I can save the money
I’ll need for LTC.”
Fact: Paying long term care
expenses out-of-pocket can wipe out a lifetime of savings. Today, the
average cost for a one-year stay in a private nursing home room is $83,580.1 At
that rate, savings of $500,000 would be depleted in just a few years. And
one-in-five Americans will require long term care services for five years or
more.2
Myth: “LTC protection is too
expensive.”
Fact: There are many combinations of
LTC features and payment options that may work with a range of financial
situations. Traditional LTC policies typically are funded like other
insurance policies, with monthly or annual premiums that may be subject to
periodic increases. Asset-based protection can provide a healthy mix of funding
options – including a single lump-sum premium or options to pay level premiums
over a period of 10 to 20 years.
Start the Conversation
From a wealth management perspective, it’s important to
remember that LTC protection doesn’t exist to make clients rich. It exists to
keep them from becoming poor. That makes it an important element of any
well-rounded retirement income strategy and certainly a topic worth discussing.
OneAmerica® is the marketing name for
the companies of OneAmerica. Products issued and underwritten by The State Life
Insurance Company® (State Life), Indianapolis, IN, an OneAmerica company that
offers the Care Solutions product suite. Provided content is for overview and
informational purposes only and is not intended as tax, legal, fiduciary, or
investment advice.
Footnotes:
1 “Costs of
Care.” http://longtermcare.gov/costs-how-to-pay/costs-of-care/ 2.14.17
2 “How Much Care Will
You Need?” http://longtermcare.gov/the-basics/how-much-care-will-you-need/
2.14.17
3 “Who Will Provide
Your Care?” http://longtermcare.gov/the-basics/who-will-provide-your-care/
2.14.17
https://www.thinkadvisor.com/2017/04/18/addressing-the-myths-of-long-term-care/
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