In recent decades, we have witnessed a remarkable phenomenon: a steady increase in human longevity. This triumph of modern medicine and healthier lifestyles is a cause for celebration. However, it also brings to the fore a critical challenge: the escalating need for comprehensive health care as we age. As we navigate this new landscape of extended life spans, the role of long-term care insurance emerges as a pivotal element in securing our future health and financial well-being.
UNDERSTANDING THE LANDSCAPE OF AGING AND HEALTH CARE
The 21st century has seen unprecedented strides in health care, leading to a significant increase in life expectancy. While this is a testament to advancements in medical science, it also means that individuals are likely to spend a larger portion of their lives in need of medical and personal care. Chronic illnesses, mobility issues, and cognitive disorders like Alzheimer’s disease become more prevalent with age, necessitating long-term health care services.
Yet, we downplay the risk of needing care. The belief that you will be the exception is just one way that Americans fool themselves and procrastinate on creating any type of plan. (A 2021 Gallup poll found less than 50% of Americans have a will!)
Three-quarters of Americans believe that “living a healthy lifestyle is the answer,” but living healthy may simply increase longevity. With longevity comes the perils of aging and the staggering costs of healthcare.
More than half of Americans say having a spouse provide for their care is their plan, yet very few spouses signed up to change diapers, nor could most adequately care for an aging or sick spouse, especially given their own possible health concerns. That burden then falls upon the children, 61% of whom say they “don’t want to be someone’s caregiver.”
The cost of healthcare in later life can be staggering. Any type of health care, whether in-home or at a specialized facility, is expensive and often not covered by traditional health insurance or Medicare. This financial burden can deplete savings rapidly, impacting not only the elderly but also their families. The likelihood of depleting assets, or consuming assets intended for a spouse or legacy is strong, given that 2 out of 3 Americans will need some type of long-term health care for at least 90 days during their later years.
THE ROLE OF LONG-TERM CARE INSURANCE
Long-term care insurance (LTCI) is designed to cover services that regular health insurance does not, such as assistance with daily activities (bathing, eating, dressing) and extended stays in nursing homes or assisted living facilities.
Why consider LTCI?
- Financial security: LTCI helps protect your savings and assets from the high costs of long-term care.
- Flexibility of care: LTCI provides more choices for the type of care you receive and where you receive it.
- Peace of mind: Knowing that you have a plan in place for future care can offer peace of mind to you and your loved ones.
Start by evaluating your potential long-term care needs. Consider factors like family health history, current health status, and available support networks. Consulting with a health care professional can provide insights into what kind of care might be necessary in the future.
THE PERFECT LONG-TERM CARE STRATEGY IS HERE
The insurance industry has figured out a really great solution—it’s called asset-based long-term care. Similar to a bank CD, this plan leverages up for health care. Think ”moving money from one pocket to the other,” with the second pocket guaranteeing you can always return the money to the original pocket, but the dollars placed in pocket B are bigger than pocket A.
Here’s how it works. Position a lump sum in a specialty insurance contract. If things change you get all of your money back. Never use care and get a tax-free death benefit. But, if you need care, your own money gets leveraged up in value by 4 to 6 (depending on age). This strategy guarantees that, no matter what, you never lose! And you don’t have to buy anything.
Not all LTCI policies are created equal. It’s crucial to research and compare different policies. Look for features like inflation protection, range of care options covered, and flexibility of benefit usage.
The best time to plan is NOW. The second-best time is when you are in your 50s or early 60s. Insurance leverage is generally greater and lower for younger, healthier individuals, and the risk of being denied coverage due to preexisting conditions is minimized.
The convergence of aging longevity and the increasing need for health care presents both challenges and opportunities. Long-term care insurance emerges as a crucial tool in this landscape, offering a way to secure our health and financial well-being in later life. By integrating LTC planning into your financial planning, you can approach the future with confidence, knowing that you are prepared for the long term. As we celebrate longer lives, let’s also embrace the responsibility of planning for our extended healthcare needs.
Martin Levy, CLU/RHU, is president and founder of CorpStrat Inc., located in Woodland Hills, Calif. Marty is a Life Member and Qualifying Member of the Million Dollar Round table and a 30+ year financial services professional.
