Continuing Insurance Education – Long Term Care Insurance

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HOW DOES ONE PLAN FOR THE POSSIBILITY OF A NURSING HOME?

People are living longer – surprise, surprise. This is the good news. The bad news is that because people are living longer, there are more ill older-generation people than ever before. Whereas people used to look forward to living long enough to retire at age 65, now they anticipate living for another 20-30 years. Now, when people think about getting older, they worry about what they will do in their “golden years.”

Each generation is a little wiser than the preceding generation, and even though many of their worries are the same, the later ones have the advantage of building upon the knowledge of the previous generations. One thing that many – if not most – have learned is the need for planning. Many have seen family and friends become disabled because of illnesses or accidents in their later years, and they are also aware that there will be care needed for the older folks as their health deteriorates.

PLANNING, WHEN AND HOW?

Bill has just turned 65 and has retired. His wife, Ann, is now 63, and they have three children, all married with children of their own. Bill’s mother typically outlived her husband, Bill’s father, and has recently moved into an assisted living facility as she has difficulty in “getting around.” One of their grandchildren is autistic and required a lot of attention from her parents – her mother had to give up working to take care of the child. Their son is struggling financially as he has two children in college, one of which will go to law school if there is any way that he can afford to do so. Their daughter has a happy family, with a good husband and three lovely children. All-in-all, each of their children is totally wrapped-up with their own family matters and Bill or Ann would not want to disturb those situations under any circumstances.

Bill remembers visiting with his grandfather in an “old folks home” when he was small and his memory is that the place where his grandfather stayed smelled “funny” and was full of people who seemed to have no place to go or nothing to do, and every visit was depressing. Bill decided that he never would go to a place like that to stay.

Ann’s parents have a “plan” for such contingencies; one that they feel would serve them quite nicely. Her parents are in their early 70’s and are just now ‘starting to slow down.” Her father has difficulties in walking any distances at all and her mother is terribly forgetful, so Ann must check on her parents very often. Their plan, which they have just now started to fulfill, is to sell their house – it is way too large for them now anyway. They want to be “independent” so they do not want to move to any kind of place that “does for them.” They cannot stand the thought of not being independent. Therefore, they are planning on buying a small house or condominium in an area where they can walk to the grocery store, Wal-Mart and Applebee’s. They will use the money that they get from the sale of their house so that they will not have a mortgage, and whatever is left over will provide additional funds to supplement their Social Security and a small pension that her father has. That, in a nutshell, is their plan.

For Bill and Ann, there must be additional planning because if either of them becomes incapacitated, they are going to have to take care of themselves, as they would never impose on their children to help, as they are all busy raising their own families. If they have sufficient funds to make it worthwhile, they could use the services of an estate planner so that the surviving spouse will not be hit with a large tax burden. Trusts could be established so that the funds will be used to the best advantage of each other and their children when they both pass on, or are not able to handle their own financial matters. Perhaps they may want to use the services of a financial planner also, especially if their income is derived from various sources or they are invested in the stock market or similar investments.

What does this have to do with Long-term Care Insurance (hereinafter referred to as “LTCI”)? To jump ahead a little, in those situations where a financial planner or an estate planner becomes involved:

FT here have been, and will probably continue to be, lawsuits involved where a financial planner, estate planner, or sometimes, just an insurance agent – does not make the client aware of the availability and advantages of Long-term Care Insurance.

Heirs who anticipate inheriting sizeable estates will be quite offended if they learn that the estate has been diminished by nursing home and/or other long-term care expenses, and that the “professional” who assisted in the estate or financial planning, did not make the estate owner aware of such a program.

About the Author: AKDSEO

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