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Long term care insurance is one of the fastest growing segments of the insurance industry. As the “baby boomers” approach retirement age, and they see the reality of the expense and burden of dealing with aging parents, long term care insurance is often the solution.
Long term care (LTC) insurance typically pays a daily or monthly benefit for care needed at home, at an assisted living facility, adult day care, and a nursing home. Before a benefit can be paid, often the person insured must either be unable to perform without assistance at least 2 out of 6 Activities of Daily Living. The six activities are bathing, dressing, eating, transference, continence, or toileting. Another separate trigger for benefit payments are severe cognitive impairment, such as severe dementia or Alzheimer's.
This is not a pleasant topic to discuss or plan for, but in the absence of planning a person's estate can be wiped out quickly due to escalating costs of this type of care. In today's dollars, a month in a nursing home can easily be $ 5,000 to $ 10,000 or more.
Many people have the misconception that if they need this type of benefit that the Government will take care of it under Medicare or Medicaid. Medicare provides an extremely limited benefit for long term care expenses, and Medicaid is increasingly more difficult to qualify for.
For the business owner or professional, the good news is that there are ways to have the premiums paid by the business or firm with significant tax advantages. Also there are ways to structure the premiums so that the policy becomes “paid up” over a ten-year period of time so that as one ages he or she no longer needs to worry about escalating premiums after retirement.
One important concern is that the insurance company is solid financially since benefits are often deferred for many years down the road. Certainly there are situations such as what happened to Christopher Reeves, but they are rare. While many people have disability insurance to age 65, what happens when one becomes disabled after 65? Long term care insurance will provide benefits both before and after age 65.
Call or e-mail for a confidential discussion of your particular needs.
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