Have you ever considered that you may need long-term care at a certain point in your life? Have you made any plans to cover such costs if it ever comes to that? If not, then you should likely start as soon as possible.
You can’t know for sure whether you will ever come to a point where you need such benefits. However, specific situations may lead you to think more seriously about getting long-term care insurance or planning ahead for self-funding.
For example, If you’re getting older or you’ve had some severe health problems in the past, you might consider your options more seriously. And if that’s the case, we’re here to help you out with some information and advice on how to go about planning for long-term care.
This article will explore what long-term care is, how you should plan for it, and some factors (both internal and external) you should consider when making decisions about your health and financial situation. With that said, let’s dive into this topic.
What Is Long-Term Care?
Long-term care typically involves a variety of services designed to help a person meet their health and personal care needs for a certain period of time. Long-term care doesn’t only have to refer to end-of-life care or “old folks’ homes,” but it can also refer to care provided to people who cannot complete tasks on their own due to medical conditions, illnesses, etc.
These kinds of services allow people to live as safely and independently as possible for as long as possible despite no longer having the ability to perform some essential daily activities on their own.
Long-term care can be provided in several different locations and by different kinds of caregivers, professional or otherwise—it all depends on the person’s needs. In many cases, family and friends care for their loved ones at home and, of course, don’t get paid for doing so. For example, a wife who cares for her husband who cannot stand for long periods of time, or a son taking care of his elderly mother. However, such services can also be provided in nursing homes, assisted living centers, and other long-term care facilities.
Most long-term care involves personal care, which usually consists of helping someone with everyday activities like bathing, dressing, grooming, using the toilet, moving around, and eating. Long-term care can also include community services like transportation.
People can require long-term care when they’re facing a serious health condition or a disability. The need for long-term care is often something you can’t predict, as it can be a consequence of something unforeseeable like a heart attack or a stroke. However, the need for long-term care may increase with time if illnesses worsen or circumstances change.
Do You Need Long-Term Healthcare Insurance?
Long-term care typically involves a variety of services designed to help a person meet their health and personal care needs for a certain period of time. Long-term care doesn’t only have to refer to end-of-life care or “old folks’ homes,” but it can also refer to care provided to people who cannot complete tasks on their own due to medical conditions, illnesses, etc.
These kinds of services allow people to live as safely and independently as possible for as long as possible despite no longer having the ability to perform some essential daily activities on their own.
Long-term care can be provided in several different locations and by different kinds of caregivers, professional or otherwise—it all depends on the person’s needs. In many cases, family and friends care for their loved ones at home and, of course, don’t get paid for doing so. For example, a wife who cares for her husband who cannot stand for long periods of time, or a son taking care of his elderly mother. However, such services can also be provided in nursing homes, assisted living centers, and other long-term care facilities.
Most long-term care involves personal care, which usually consists of helping someone with everyday activities like bathing, dressing, grooming, using the toilet, moving around, and eating. Long-term care can also include community services like transportation.
People can require long-term care when they’re facing a serious health condition or a disability. The need for long-term care is often something you can’t predict, as it can be a consequence of something unforeseeable like a heart attack or a stroke. However, the need for long-term care may increase with time if illnesses worsen or circumstances change.
Do You Need Long-Term Healthcare Insurance?
Decades ago, stand-alone long-term care policies were quite popular, but this is no longer the case. Many insurance companies were charging lower prices than they realistically should have, and know that their charges reflect all the risks associated with long-term care, stand-alone policies are more expensive than many people can afford.
Since then, insurers have been trying to come up with long-term care insurance that appeals to middle-class consumers, but this has proven to be more difficult in practice than in theory.
Hybrid Long-Term Care Insurance
Hybrid life and long-term care insurance policies tie two types of insurance into one bundle. Unlike stand-alone policies, premiums may be fixed and not subjected to any increase. Medical underwriting may be less rigorous than with a stand-alone long-term care policy. These benefits can be beneficial for people looking into lifetime and unlimited long-term care benefits.
Additionally, these types of policies come with tax advantages. With them, the amounts spent on care get subtracted from the policy’s death benefit, which means that the remaining amount goes to the policyholder’s heirs completely free of taxes.
All in all, hybrid long-term care insurance is a great fit for those who don’t like the “use it or lose it” feel of stand-alone long-term policies and want to get something out of all the money they spend on this type of insurance. It’s also suitable for people who would like to leave an inheritance but don’t mind if their heirs receive nothing directly from the long-term care policy in the event that they need the money to cover care costs.
A good example of this is a whole life policy with a long-term care rider, which is a feature that allows you early access to some of your death benefits (the money that’s given to your beneficiaries when you pass away). This money can be used to cover care costs that you face due to chronic or critical illness.
This feature is similar to an accelerated death benefit in that you can receive money early, but with a long-term care rider, you don’t need to be diagnosed with a terminal illness—just a chronic illness or impairment that prevents you from completing daily functions.
Annuities With Long-Term Care Benefits
Some kinds of annuities can come with contracts that pay a bit more if you’re in need of long-term care. Typically, the annuity pays one monthly benefit amount. However, if you need long-term care, it can start paying a larger amount that’s a multiple of the premiums you’ve already paid.
Here, as with most insurances, you’re leveraging a small amount of money to buy the possibility of much larger benefits in case you need it. Along with that, the long-term care benefits that you receive are tax-free. This is a good option for people who want the steady monthly income that comes with an annuity and the protection against potentially outliving their assets. Additionally, long-term care annuities have simpler medical underwriting requirements compared to stand-alone long-term care or life insurance policies.
However, one major downside of buying an annuity is that you’ll have to pay quite a large sum upfront and the annuity may not provide the best benefits in terms of long-term care if interest rates are low.
Regardless of which option you go for, it’s vital to keep in mind that long-term care is getting more expensive every single year. There are many reasons for this, including the rising cost of living. So if you choose to opt for insurance, it’s a good idea to make sure your policy isn’t getting increasingly more expensive with each passing year.
Long-Term Care Planning
It’s impossible to predict whether you will ever need long-term care from people outside of your family unit. You may never need it at all! However, if an accident, illness, or injury unexpectedly happens, it may drastically change your plans and your needs.
One of the most common reasons people aren’t willing to invest in a long-term care insurance plan is that they aren’t sure if they will actually use it. That’s why many people prefer to save and invest more of their income as a way to ensure they can cover costs without insurance if needed.
With that said, the best time to plan for long-term care is before you actually end up needing it. Preparing for the possibility isn’t fun, but it gives you the opportunity to learn more about the different types of long-term care options.
Knowing your family’s medical history gives you insight into what your golden years might look like. For example, suppose your family has a long history of chronic illness that develops later in life. In that case, it’s probably a good idea to consider buying stand-alone long-term care insurance or having a special investing and savings plan. On the other hand, if your family is exceptionally healthy and your ancestors have traditionally lived active and capable lifestyles until the very end, you may be less interested in spending money on long-term care insurance.
Additionally, you should consider your personal medical history and your way of living. For example, do you have any chronic illnesses? Do you practice an extreme sport? Is your job dangerous and possibly physically harmful? Are you close to your children? Do you have an agreement that they will care for you if needed? Many factors affect your decision on if and how to finance your long-term care.
Key Takeaways
As is the case with most major decisions, we don’t really think about long-term care when we’re young. It’s easy to assume that we will always be able to take care of ourselves, but this won’t be the case for many of us. As we grow older and realize how difficult the later years of our lives can be, we’ll want to make things as easy as possible, both for the people closest to us and for ourselves.
This is where life insurance policies and long-term care planning come in. Of course, there’s no one-fits-all answer on whether you should or shouldn’t invest in long-term care planning. It all depends on your family history and personal situation: how prone you are to illness, your medical history, and your occupation. We suggest using the information in this article as a starting point to make a more informed decision about your long-term care planning.
Please feel free to reach out to me on this or any of your investment needs or questions. I may not always have the answers at my fingertips, but I promise I will get them for you. Michael Torrence
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Michael Torrence – Investment Advisor Representative: Michael was born and raised in Ohio and attended The Ohio State University. After College, he was commissioned as a 2ndLt in the United States Marine Corps. He attended his initial training in Quantico, Virginia, then graduated at the top of his Primary Aviator Class and was selected for the Strike (Jet) Platform.
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