Long-Term Care: Don’t Underestimate Your Need For Coverage by Grant Barra

            Aging baby boomers and new medical technology that prolongs life have increased the need for long-term care. Long-term care is something Americans of any age should be thinking about, but most people are not aware of or prepared for the cost.

            Long-term care refers to a wide range of medical and non-medical services – including custodial help with daily activities, nursing care and skilled nursing services – for people who are physically or mentally unable to care for themselves. Home health care, adult day care, respite care, assisted living and nursing home care all fall into the category of long-term care.

Long-Term Care Insurance Critical for Any Age

            A long-term care insurance policy can help cover the expenses incurred for long-term care. Many people mistakenly assume that long-term care insurance is only for the elderly, but a third of all individual long-term care policies are purchased by people younger than 65. The coverage is critical for a person of any age; plus, it can be more economical to purchase such coverage when younger.

            Anything can happen to anyone at any time resulting in the need for some sort of care. It is not uncommon to find a person in their 30s in a nursing home because of a debilitating accident.

Other Coverages Inadequate

            Other types of insurance or government programs don’t provide the amount of coverage available in a long-term care policy.

1. Health insurance policies typically do not cover long-term care costs such as nursing homes or assisted living facilities. Also, most policies don’t pay for adaptive equipment, special transportation needs or home modifications.
2. Many Americans assume that Medicare will cover these costs. However, coverage is limited and may still require large out-of-pocket expenses. Also, Medicare pays for skilled nursing facility care only after a discharge from a three-day hospitalization. It does not pay for custodial or intermediate care, and the majority of care provided in nursing homes is custodial, which includes assistance with dressing, eating and moving around.
3. After an individual has exhausted all of their assets, they may qualify for coverage under Medicaid. However, with Medicaid an individual and their family members lose choice over the care received.

            A long-term care policy can save you from having to deplete your assets for care and can prevent you from being at the mercy of the state. In some sense it’s lifestyle preservation to ensure you have a choice in your care. At the same time, it’s asset preservation – it allows you to pass something to your heirs.

It Pays to Shop Around

Here are some things to look for when shopping for a long-term care policy:

1. Purchase a policy from a company that is financially strong. Be sure they will be there when you have a claim.
2. Select an agent who is experienced with long-term care and with whom you feel comfortable. 
3. Consider purchasing compound inflation protection because the cost of care is expected to increase considerably over the next 10-20 years.
4. Weigh the difference between a lifetime policy and a limited benefit policy. In many cases, the premium difference between a five-year policy and a lifetime policy is minor.

- Grant Barra

Grant M. Barra, LUTCF, CLF®
Connect with me at www.linkedin.com/in/gbarra

Protecting Your Most Important Asset by Grant Barra

What’s your most important asset? Your home? Other property? Savings? For most Americans, one particular asset – your income – is more important than any of these. Everything most people own is dependent on their ability to earn an income. It’s that steady paycheck that allows you to hold on to what you have.

If you became unable to work because of sickness or injury, how would you pay your monthly bills? Generations of Americans continue to depend on disability income insurance, which was introduced by Insurance companies in the early 1900s. Disability income insurance provides protection for your income. It’s an affordable solution that pays a monthly benefit while you are disabled due to a covered sickness or injury and can’t work.

Nobody wants to think about becoming disabled, but ignoring the risks could result in a catastrophe. Can you afford to miss more than two months of work without having to borrow money? The problem is borrowing often isn’t feasible because it can be tough to get approved for a loan without an income. Social Security will pay disability benefits, but only after a lengthy waiting period. You can tap your savings, but that will exhaust most workers’ savings in about two months. Selling your assets is a last resort – but you may not get fair value for your assets and then you’ll have nothing.

Disability Income Insurance Provides A Bridge

Disability income insurance provides a bridge over times of trouble. Disability income insurance can be designed to provide a significant portion of your regular monthly income (generally 60 percent) and benefits can be timed to begin according to need.

Disability income policies also could continue to pay benefits during rehabilitation, job re-training and part-time employment. A survivor benefit would pay a lump-sum benefit to your beneficiary if you die during a period of disability. Optional features (riders) could be added to most disability income policies at extra cost. These may include a cost of living adjustment to compensate for inflation and a return of premium rider. This latter feature may allow the consumer to specify that a portion of the premiums (sometimes up to 80 percent) will be paid back – less any claims paid – after the insurance has been in force for 10 years. Owners of small businesses who select disability income insurance could have business overhead expense coverage that will help pay business costs including rent, utilities and interest on business loans.

Disability income insurance also provides some benefits that are intangible, but still very important. Your most important reason for purchasing disability income insurance could be the “peace of mind” that comes with knowing that bills will be paid in the event of a disabling illness or injury.

And don’t underestimate the boost in confidence and sense of self-worth that comes from providing for your family even though you’re experiencing a disability.

Grant M. Barra, LUTCF, CLF®
Connect with me at www.linkedin.com/in/gbarra