Insurance is one of the great innovations of modern society. By joining together with a group, members can substantially insulate themselves from financial disasters that come via fire, flood, theft and illness. In effect, the group collectively shares the costs that would otherwise land randomly, and tragically, on a few.
Unfortunately, Pee Wee Herman was right when he lamented, “Everyone has a big but(t).” You see, you thought you had insured away the major risks of life, BUT … substantial advances in average life span have added a fat new slot to your random financial disaster roulette wheel – the 50% chance you will need basic living assistance as you age.
To explain, health insurance is designed to “get you better” when you become ill
or injured. If you neither die nor get better (i.e. regain your ability to live without assistance), you’re in big trouble. Your life insurance policy won’t pay (you’re not dead) and neither will your health insurance (you’re not sick and getting better).
Let’s go over that again. Studies project that, as medical advances prolong life, there’s a 50% chance any individual will need assistance with basic living: bathing, dressing, eating, medicating, transportation, etc. Your health insurance will not pay for these. Sure, your loved ones could, but how much? What if you need round-the-clock care? What if your spouse can’t lift you? What if your spouse needs to work? What if you don’t have a spouse? What if you don’t want your spouse, or children, to have to clean you each day? For 10 or 20 years, possibly?
Today, according to MetLife, the average annual cost of private nursing home care is $75,000. If you want better than average, it will be more. If you want in-home care, as most do, it’s expensive.
How will you pay for it?
Long-term care is a BIG hole in most people’s financial planning. It can wipe out a lifetime of prudence and wealth building. It can put a family into the poor house, literally. It can also tear it apart as they argue over who will personally provide, or pay for, your care.
Talk to your financial planning professional about long-term care cost contingencies. And, don’t forget that the time to obtain health, disability, life and long-term care insurance is when you are healthy!
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.
This publication is intended to provide general information on the subject matters covered. It is sold and distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
D.L. Perkins, LLC is solely responsible for this content.
