Q: Isn’t this long-term care insurance thing just another insurance company creation? Twenty years ago, this problem … and this insurance product … did not even exist. And, there are millions of people getting daily “custodial” living assistance today. Most did not have long-term care insurance. Please explain why I should take this seriously.
A: True, this insurance product has emerged in the last twenty years. But, the reason is not because of the insurance companies, but because of the rapid advancement of life expectancy. Medicine and medical care are saving lives and people are living longer, but many are unable to fully care for themselves. If you end up needing extensive assistance, there are only two options – your loved ones provide it or you pay someone to provide it. Securing and managing outside providers is expensive and time consuming. If you don’t have insurance to fund it, you’ll simply have to pay from your income or assets. The risk is that your income will not be sufficient to cover the cost. Keep in mind that it’s a pretty difficult planning task because you don’t know whether you’ll ever need living assistance or if you’ll need round the clock care for 30 years. If your income is not sufficient, you’ll need to liquidate assets – home equity, retirement accounts and even life insurance benefits (hardship advanced on death benefits). If you go broke, there’s Medicaid … but you don’t want the government-provided level of care. If you don’t believe me, visit a nursing home that takes Medicaid funds.
This article originally appeared in The Business Owner Journal, the periodical of choice for owners of small and midsize private businesses. All rights reserved, D.L. Perkins LLC. © 2012.
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