Seven Important Reasons to Invest in a Long Term Care Insurance Policy (No matter what your wealth is) Part 1

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. The challenge for all of us is to avoid Scarlett O’Hara’s “I’ll think about that tomorrow” approach and to understand instead that although it may appear that there is no reason to think about it, it is essential to plan for those risks now, when we still have our physical and mental strength, and when our planning can be clear headed, strategic and efficient.  There are seven good reasons to consider investing in long term care insurance now.

1   IT IS YOUR RESPONSIBILITY TO PROTECT YOURSELF.

In the same way that you have made wise decisions in your life thus far, it is your responsibility (and no one else’s) to think through what may happen to you as life goes on and to put in place a system to make decisions about your care should you be unable later to make them yourself.

Deciding how to cover the future risk of long term care is difficult both personally and financially. None of us want to face the possibility that our mental or physical health could decline to the point where we will be unable to take care of ourselves. It is normal to be in denial about that possibility and to focus instead on today.

Even when you are willing to face the possibility of the loss of control of mental or physical faculties, it is impossible to quantify what the financial consequences of that will be. It is also not possible to predict how much or how long care will be needed or what the best care will be. Since the cost of the care is not predictable, it is very difficult to save for it.  An investment in a long term care policy allows you to know that you have covered your risk and protected your care. It is a  way to hedge your bet and to cover that risk with the information you have in hand. If you need the care, the insurance will at most cover the risk and at worst cushion the blow.

2.  TO MAINTAIN YOUR INDEPENDENCE.

Everyone reading this column is a responsible, independent person. You have controlled your own destiny and made wise choices thus far. You are not an ostrich with your head in the sand. You understand that there are risks in life and that you will have to navigate many hurdles.

You are an independent thinker, and you want to remain independent, in charge of your decisions. You know that you do that better than almost anyone else.  Setting the course, making the best choices you can about your future care needs, putting the safety net in place and making sure that you do not have to rely on anyone else to make those choices and decisions is consistent with the way you lead your life. When you decide to maintain your independence by taking the steps to put the right plan in place for you, you will then have put a safety net in place that will insure that your care is handled in the way you wish it to be.

To remain independent, you must have the financial ability to support the choices you wish to make, and you must put the legal documents in place that will make sure that your choices are honored and respected.

3.  TO PRESERVE YOUR DIGNITY.

As Raeann Berman and Bernard H. Shulman write in Caring for Your Aging Parents, the fabric of the family contains many interwoven threads. Each family member tries to assure his own place by carrying out learned patterns of behavior, i.e., assuming his or her role while interacting with everyone else in the family.

In a parent-child relationship, problems begin when the aging parent’s status is threatened by failing powers. Older people not only need status, they are accustomed to having it. Over the years, they have built up a sense of what is important and necessary. They need to feel respected for who they are and what they have contributed.  When their physical and mental health begin to decline, and, for the first time since their childhood, they need assistance with the activities of daily living, such as cleaning, bathing, eating and, dressing, who do they want to assist them?  Many parents do not want their children in that role and many children do not want to be in that role, especially when there are gender issues—daughters are uncomfortable bathing and dressing fathers as are sons bathing and dressing their mothers. But when no thought has been given to a more comprehensive care system and no sufficient funds are available to have outsiders give that care, those awkward tasks frequently fall to family members.

An investment in a long term care policy allows you to have the funds to pay for a custodial care giver and to maintain your dignity. It also allows your child to hire a care giver without feeling guilty that care giving is a child-parent moral obligation.

 

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.

Comments

  1. I totally agree with your post. However, there are some downers involved here as well. I just experienced my carrier raise premiums by 70%!! It is the first increase in many years, but it’s a whopper. I am way too old to change carriers. So my only option was to decrease coverage in order to be able to afford the coverage. What is next? Will this company (well known and highly reputable) do the same thing again in a few years? Will I end up losing the coverage just when I need it? This business conduct sounds like a disguised way to get out of the business (which one advisor told me the Company was saying it was trying to do).

    • Your best bet is to call the company and ask them what your policy premium increase will be in the future. You can also look into your policy to see what is writing there on premium increases. Some companies will increase rates every few years. Some will increase rates every year. Other companies may wait until you reach a certain age before increasing premiums. It is hard to say without looking at your policy or talking to your company.
      No one knows for sure what the company is or is not trying to do but the company. I doubt seriously if the company would have come out publicly and state it was attempting to get rid of all of the long term care policy holders it has. That is not to say they are not attempting to do just that.
      Some companies will implement increases to get individuals to drop out to lower the company’s risk to claims. However, a highly rated company would risk far too much in lost revenue, market credibility, and potential governmental legal trouble to undertake such a move. You can check with A.M Best to find out how your company is rated. If the company is rate at the level of “A” or above it is a good company. If not, may be you do have some problems. You can find A.M. best on the internet. They are a third part insurance rating company.

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