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.
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