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Top 10 List of
Objections to Purchasing
Long-Term Care Insurance
By
Sally H. Leimbach
My professional
mission since 1992 has been to educate advisors and consumers about how to
plan for the potential need for long-term care. With proper planning,
long-term care can be a definable expense in much the way health expenses
are defined for many consumers. Planning for these needs should also be an
integral part of the financial planning process.
The long-term care
problem has been referred to as “the Sleeping Giant of all U.S. social
issues.” It is
vitally important that advisors such as attorneys, CPAs and financial
planners understand the facts and issues surrounding long term care and be
ready to incorporate this important area into their discussions and when
planning work with clients.
This article deals
with a “Top Ten List of Objections” people often have to the purchase of
long-term care insurance and some insights on how to answer those
objections.
Top
Ten List of Objections
to the Purchase of
Long-Term Care Insurance
#10: “I’m covered
by other insurance.” Unless your other insurance is long-term care
insurance, you’re probably not covered. Long-term care isn’t covered by
familiar forms of insurance like health insurance, retiree health plans,
Medicare and Medicare supplement plans, to name a few. These plans only
pay for skilled medical care, but most long term care is just maintenance
– helping someone bathe, dress, move around, use the bathroom, etc.
Additionally, you must be at least 65 years old to be eligible for
Medicare.
#9 “It won’t
happen to me.” Forty percent of Americans needing long-term care are
between the ages of 18 and 64. By 2030, it is estimated that 2.7 million
seniors will need assistance with two or more activities of daily living.
How can you predict that you will not be one of these?
#8 “I can pay for
the cost myself.” The annual cost of long-term care in the Baltimore area
can easily be more than $70,000 per year for either nursing home care or
home care. The cost is escalating at about 5 percent compounded per year.
Long-term care insurance allows you to pay a pre-set premium that fits
your budget and helps offset the risk of much larger out-of-pocket
expenses.
#7 “I’d rather
invest the money than use it to pay premiums.” This may be some peoples’
answer to #8. If so, consider the unpredictability of returns on
investments for the last three years. And don’t forget the
unpredictability of when someone might need care. People of all ages may
suddenly need long-term care as a result of auto or sports accidents or a
debilitating disease.
This strategy is
close to saying that you should invest the amount of medical insurance
premiums to cover medical expenses instead of paying them to the insurance
company.
#6 “If I don’t
need the care, I’ve wasted the money spent on premiums.” Is this how you
feel about premiums spent on medical, homeowners, personal property and
automobile insurance? Among these, purchasing long-term care insurance is
most similar to purchasing medical insurance. Would you have peace of mind
if you had no medical insurance?
#5 “I don’t want
to go to a nursing home.” Long-term care insurance can pay benefits at
home, in an assisted living facility, as well as in a nursing home. In
fact, you are less likely to have to go to a nursing home if you have
private insurance to purchase care at home.
#4 “My children
will take care of me.” Is that what you want for your children? If you
need long-term care, your children should be involved, but their
involvement should be to provide you TLC (tender loving care), not LTC
(long-term care, assisting you with your activities of daily living).
Long-term care insurance provides the funds to help facilitate quality
care with minimum family stress.
#3 “I’m too old.”
Maybe. However, depending on health and goals, long-term care insurance
can be a viable planning option through your 70s. But remember, cost over
time is substantially less if you purchase it at younger ages.
#2 “I’m too
young.” Maybe. The majority of my clients are now couples in their early
50s. There certainly can be reasons to purchase at earlier ages,
especially if there are family medical history considerations. Remember,
you lock in your premium age at your age at the time of initial purchase.
#1 “It’s too
expensive.” Have you really looked at the premium cost for insurance that
is appropriate for you? Most people are surprised at the affordability of
the premiums considering the value that having the insurance brings to a
solid financial plan. The real danger may be that people underestimate the
costs of long-term care and are often faced with insurmountable costs that
quickly deplete their life savings.
Additionally, don’t
forget that there can be state and federal tax savings for purchasers of
long-term care insurance.
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