Seven Important Reasons to Invest in a Long Term Care Insurance Policy (No matter what your wealth is) Part 3

Today, the risk of losing control over physical or mental faculties must be factored into every adult’s planning. As the population ages and medical science advances, we all have a strong chance of living longer than our parents and grandparents did. The longer we live, the more likely it is that our mental and physical conditions will weaken and we will need additional support. Here are the final two good reasons to consider investing in long term care insurance now.

6. TO EXPAND YOUR CARE OPTIONS.

When you do not have the financial means to put whatever care plan you want into place, then your care options are limited. Given how difficult it is to figure out what care will be required or how much it will cost, when you don’t plan to Image of a care healthcare professional with a patientcover that risk,  you limit your available care options to what you can afford, which, from current income sources, may be the good will of family caregivers and governmental social services. When long term care policy is not in place, and available income is limited, fear can set in and preclude the best system of care from being implemented.

When you have enough financial resources so that you and/or those who love you can help you put the best care plan in place for you, your options expand. Your family and loved ones can then explore alternative solutions such as aides who are companions on a regular basis, clinical social workers, assisted living facilities, quality nursing homes, Alzheimer’s units, and geriatric care managers. You may be able to put together a situation that keeps the parent at home, provides the right level of care and provides respite to those family members who will be providing various levels of care.

7. TO PROTECT YOUR FINANICAL POSITION. 

You have worked hard for decades to build your net worth and cash flow. Along the way, there have been unavoidable setbacks—the recession, inflation, economic changes, emergency cash needs. Even proper planning cannot solve all of those issues. However, proper planning can hedge against the risk and cushion the blow if a need for long term care assistance arises. Exploring the purchase of long term care insurance and deciding whether or not it makes sense to you and your family so that your assets and income will be protected is an important economic exercise. I have seen families join their financial recourses together to split the cost of the premium so that the parents’ assets and income are protected, and the system of care giving is in place.

When the parents and the children share in the cost of the long term care insurance premium, they are also ensuring that there will be an inheritance to pass down to children and grandchildren.  Most of us have worked long and hard to build our net worth to the place where it is.  Those who have saved assiduously for a rainy day never contemplated that in the senior years the cost of care would be this exorbitant, and, in many households, would not only exceed income and cash flow, but significantly whack into the principal they have saved for so long to preserve and protect.

Holding a family meeting and putting these issues on the table can be valuable. When the issues are put forward long before disaster strikes, and all available options are considered, a family can come together and think through solutions creatively as to how to minimize the burden should long term care be needed. It is critical for the family to hold a meeting to develop a family plan that makes sure that all legal documentation (health care proxies, durable powers of attorney, wills and trusts) are up to date and in place, and to have an open, honest discussion about the issues the family would face if a parent declines.  Such a meeting lays out the expectations and responsibilities of each family member. It allows loved ones to assess in a non crisis situation what they would be able realistically to handle and whether or not it makes sense to explore covering the risk with long term care insurance.

In addition to children and parents pooling funds to purchase long term care insurance for the parents’ care, some families also pool resources so that each of the adult children is also covered.    If the family has a family business, that may be another benefit made available to family members.

It is also important if you share assets with others and are not the spouse or child, that you understand the economic consequence to those assets and the cash flow derived from it. For example, siblings may own a home or vacation home together. Sometimes that asset is exempt and protected, but even if that is the case, the care of a sibling that resides with you is as daunting as the care for a spouse or parent. The financial responsibilities differ. Knowing and understanding the financial consequences to each of you is important. Exploring long term care insurance can be a valuable exercise. It can be even more valuable if you are living with someone and not married to that person, or if there are siblings or cousins who co-own an asset or friends who share a home to reduce expenses.

In the case of second, third or fourth marriages, spouses are obligated to support each other. It does not matter if you have been married for two days or fifty years. The law considers the assets and incomes of both parties to be spousal. If one of you has serious medical costs, law and public policy mandate that you have an obligation to support your spouse. You cannot relieve your obligation to support your spouse in a pre-nuptial agreement. That is against public policy.  It does not matter if you brought more assets into the marriage or if you earn more income. Your spouse is your financial responsibility. Especially if you are the wealthier spouse, you should consider purchasing long term care insurance to cushion the blow of any long term care expense your spouse may incur. As you know, annual stays in a nursing home and at-home care are both very expensive.  Even though you cannot relieve your spouse of the financial obligation to support you in a prenuptial agreement, you should also consider executing a prenuptial agreement (or a post nuptial agreement) which mandates that if either of you incurs medical expenses, then your income and your assets must be used in full (to the extent of depletion) before your spouse’s assets are touched. Putting that intent in writing and agreeing to it could be a useful document for your spouse to show your children should you become ill, and your spouse begins to deplete all of your assets, and not his, on your care.

In a second marriage situation, where the concern is health issues, it is also important to execute health care proxies in which you name your spouse as your heath care agent, and you give your spouse the legal authority with a durable power of attorney to access your assets to pay for your care. If you do not put those legal documents in place, your heirs-at-law (spouse and adult children) all have the right to be heard regarding who should be in charge of your medical decisions and your financial decisions. It is your responsibility to put this in place now so that everyone understands their roles and responsibilities.

In sum, the issues we face as we live longer and medical science advances are more complicated than those that prior generations faced. The stress on family life in this economic time is extreme. Working to protect ourselves, our assets, our income, our family and loved ones becomes more difficult each day. The time to begin the vital conversation and broach these topics is now, in advance of any crisis, when there is no current need to address them. Making sure that your legal and financial affairs are in order and up to date and that the topic of long term care insurance is put forward and evaluated should be a primary goal of each family who wants to plan responsibly for the future.

 

Patricia Annino is a sought after speaker and nationally recognized authority on women and estate planning.  She educates and empowers women to value themselves and their contributions in order to ACCOMPLISH GREAT THINGS in the world – and in so doing PROTECT THEMSELVES, those they love, and the organizations they care about.  Annino recently released an updated version of her successful book, Women and Money: A Practical Guide to Estate Planning to include recent changes in the laws that govern how we protect our assets during and beyond our lifetime.  To download Annino’s FREE eBook, Estate Planning 101 visit, http://www.patriciaannino.com.

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