Consider my clients who are friendly neighbors of mine at Yacht Harbor Towers in Honolulu. After sitting down together and reviewing their unique personal situation, they bought long-term care insurance (LTCi) policies that would help pay what was then the going rate for this type of care here in the islands. But, to be sure, it wasn’t a “snap” decision. It never is with LTCi. Every LTCi client I deal with, no matter how wealthy they may happen to be, always wants to know, “what will it cost us?”, “what if we never use it?”, etc.
[Hopefully after viewing the featured, “Vernon Duckett – Peace of Mind for the Long Term” video, viewers will have a paradigm shift and their focus will be on the unequivocal, vast potential benefits.]
Long story short, this fine couple started with me in 2009 with a $250 daily benefit and a four-year benefit period with 5% simple inflation (vs. preferred “compound” inflation variable which I advise), which means the benefits increase at 5% of the original amount each year until they double in 20 years (he’ll be 83, she 82). Their daily benefit would have been growing at $12.50 each year so their benefit pool is now worth $425 x four years = $730,000. She and her husband bought the same policy so together they have $1.4 million in benefits. There is a 30-day elimination period so they are responsible for the first 30 days in charges.
He and his wife were 62 and 63 when they bought their policies in 2009, and their combined premium is $5,828 annually. They have now paid about $30,000 in premium for the $1.4 million in benefits in 20 years. If one of them had a claim today and used the entire daily benefit of $312.50, they would get their entire premium back in less than four months. A measly four (4) months! On top of that, the premium would stop for the one on who is on claim.
So what do you think? Does LTCi make sound economic sense? You Decide: It’s Your Life. But in my professional estimation, LTCi doesn’t just make good economic sense, it is actually a BARGAIN. So did my neighbors make a good economic decision? I definitely think so.
Perhaps Dorothy, in “The Wizards of Oz”, said it best: There’s no place like home! That’s why many Hawaii residents who need LTC prefer to receive it in their own homes. The ability to live independently is critical to maintaining quality of life. Remember, long-term care is not just about nursing homes anymore. Ultimately, coverage gives you the freedom of choice.
Here are my top ten reasons to buy LTC insurance coverage:
1. You will have an experienced professional available to plan for your care at home, providing all types of services related to your particular illness, injury, or condition.
2. Your family can be part of the care plan, but will not have to be the planners.
3. You will have the money to pay for long term care (according to PBN, Hawaii ranked 7th most expensive in the nation for home care services, with a median annual rate of $51,480 in 2010) without having to deplete the family nest egg.
4. Your loved ones can carry on a more normal life rather than being subject to your everyday (“activities of daily living” like bathing, dressing, eating, toileting, etc.) needs.
5. Your family will be able to attend to your needs out of love rather than obligation.
6. Because you’ll have the funds, you will be able to choose your own facility or choose to stay at home longer rather than prematurely entering a nursing home.
7. You will be able to leave some of what you have to your family rather than using up a large portion of their assets to pay for needed care.
8. You will be able to stay with your children or other loved ones without depending on them for all your care.
9. You can feel good knowing that all of the money you worked so hard to attain won’t be used up in a few short years (PBN reported that Hawaii’s nursing home costs have a median annual rate of $114,975, compared to the national average of $75,190).
10. Finally, there will be less friction between family members; one member won’t be stuck with the responsibility of caregiving.
M. Garrett Wheeler is a long-term care specialist with Guardian in Honolulu, Hawaii. He’ll be glad to explore your options for coverage that suits you best, so that if you ever need it, you’ll have the freedom to choose the care setting that is most appropriate for your circumstances. He may be reached at firstname.lastname@example.org or by phone at (808) 216-4147.