Long-Term Care Insurance is NOT for Everyone

November 2022 is Long-Term Care (LTC) awareness month, so let’s be real. When it comes to LTC insurance, ‘caveat emptor’–“let the buyer beware.” My position is that traditional long-term care is NOT for everyone. Don’t be sold a bill of goods. Do your due diligence (your homework). You may not be a candidate for this type of coverage.

The good news is that people are living longer. The bad news is that the longer we live, there is a greater risk that we will need long-term care services, which can be costly and financially devastating, especially here in the islands. A colleague of mine, Mike Pinkans, who is a well-respected CFA & CFP, shared a recent study suggesting that only 16% of Americans have financially prepared for a possible LTC need while statistics suggest that 70% of those age 65 and older will need it. That’s a cavernous divide. Why? People understand the need, they just haven’t done anything about it.

Let’s be clear: Long-term care doesn’t just affect an individual; it impacts their entire ohana. Family members provide most of the informal care, which requires time, willingness and sacrifice. I have a friend going through this situation right now. They’ve divided up the days between siblings to care for their mom. And their mom knows the all-too-real physical and emotional toll it takes on the family caregiver. It can be very stressful and taxing. Mom previously took care of their dad, who has since passed. With Long-term care insurance in place, it puts people in control, preserves their dignity and independence, protects assets and provides choice of care settings. Having a long-term care plan can save your relationships too. Nothing is more important, to me.

What place comes to mind when you hear the words “Long Term Care?” If you’re like me, ‘Nursing Home’. But let me ask, have you ever known anyone who needed assistance or help to get through the day? They were probably at home, right? So why don’t more of us have LTCi? It’s the old, ‘it won’t happen to me’ syndrome. But with glaring statistics suggesting that 70% of those age 65 and older will need it, it’s a weak argument against the need to carry such coverage. But again, an expert, fiduciary-level analysis needs to take place. With no assets comes no need for protection. With capital assets comes the real need to protect them. But yes, it is complicated because it involves emotion; revolving around dignity, control and independence. So it requires expert advice; not product peddlers.

My connection to disability and long-term care (LTC) insurance isn’t strictly a professional one. It’s a personal one too. For this reason, I believe every American deserves that some level of financial protection.

Do you actually need Long-Term Care Insurance(LTCi)? The chances of needing long-term care are 7 out of 10. Parallel, did you know that every 3 seconds someone in the US develops dementia? I did not. One thing I do know is that disabilities primarily occur due to illness, not accidents. The chances are only 7 out of 100 that you will have an auto accident sometime in your life. It is a further anomaly to have a life changing auto accident; but it happened to me in 2005(spinal cord injury). What kind of financial lifestyle would you be returning to after you recovered and then you lived another 50+ years? Unfortunately, for many, it means spending down a significant portion of your savings and assets.

So, the bottom-line question for you remains, if it does happen, will you be able to afford to pay the bills yourself? We know this: If you become disabled, so that long-term care is required, it is killer expensive. No doubt about it. And it’s not getting any cheaper anytime soon—especially in Hawaii, where a severe shortage of nursing homes is driving prices higher each and every year. Again, we live in paradise and the ‘paradise tax’ is no joke. So, ask yourself: if long-term care is so expensive, how long will my assets and investments last if I became disabled? That tells you whether you need LTCi.

As a financial advisor, I’m sharing with clients that National Long Term Care Awareness Month is a prompt to have conversations, learn the facts and analyze the options, and put something officially in place before a need arises.

Today, there are tax-advantaged ‘hybrid’ options to protect yourself and your assets. Learn about Extended Care and Long-Term Care Planning and discover new ways to protect yourself and your assets. Make it a goal to be financially and emotionally prepared to manage longevity for you and your loved ones.

Our goal is to make it as easy as possible to secure LTC coverage with the most consumer-friendly hybrid programs in the marketplace with features such as, no intrusive underwriting (no paramed exams, etc.). We deal with only the very best companies out there, all with an ‘A’ (Excellent) rating with A.M.  Speak to one of our specialists or attend one of our free webinars hosted by St. Francis Healthcare Systems of Hawaii. Find out if long-term care insurance fits into your plans. Call us today at (808)216-4147 or visit https://ltcconsumer.com/awareness-month-could-save-your-retirement/

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