Our current economic environment has left many people on less stable footing as they plan for the future. Retirement plans may be delayed, but getting older won’t be. If you consider all of the situations that could interfere with your goals, an unplanned and unfunded long-term care event looms as one of the largest.
Long-term care insurance provides benefits in the event of a chronic illness or injury that result in a need for care. It puts the power of what kind of care a person gets, how and where, more into one’s own or the family’s hands. It helps pay for care that is delivered in the home, in the community, in adult day care and in alternative living facilities, as well as nursing homes.
Certainly, people acquire long-term care insurance for different reasons. It transfers some of the financial risk of rising long-term care costs to an insurance company. In exchange for paying premiums, you contribute toward securing your dignity, choice and independence, as well as preserving your accumulated wealth.
Many people purchase long-term care insurance because they have experience the emotional toll on a family in a care-giving situation. Long-term care funding helps a family weather what can be significant emotional burdens.
There are also statistical reasons to consider putting long-term care insurance into your protection planning.
• Seventy percent of Americans haven’t planned for their long-term care needs in retirement, according to Employee Benefit News.1 What’s more, 70% of people over age 65 will require that care, whose cost is high and rising.2
• Odds are you are going to live a much longer time than your grandparents. The dramatic increase in life expectancy is certainly a bonus, but also a bane if you are unprepared. Women have a life expectancy now of 80.4 year and men 75.2 years.3
• At least one member of a 65-year-old couple has a 72% chance of living to age 85 and a 45% chance of living to age 90, assuming individuals are in good health at age 65.4
• The average annual cost of a private nursing-home room in 2008 hit $76,650; Assisted Living cost is $41,160 annually; home care costs provided by a Health Aid vary for a number of reasons including number of hours care is needed 5.
Long-term care language
When you talk with someone about long-term care insurance, be familiar with some basic terms.
• Activities of daily living (ADL’s) These are basic functions necessary to get along independently. Six are commonly recognized: bathing, dressing, transferring, toileting, continence and eating.
• Cognitive impairment: Conditions such as Alzheimer’s disease that require care and protection as a result of loss of intellectual capacity, attention and/or memory.
• Daily or monthly benefit amount: The amount of insurance benefit a person chooses to buy for long-term care expenses; the amount payable per day or per month based on the care provided.
• Inflation protection benefit: At the request of the insured, and for an additional cost, the inflation protection option provides for increases in benefit levels to help pay for expected increase in the costs of long-term care services.
• Survivorship benefit: Another benefit available at the insured’s request, and for an additional cost, that changes a surviving insured’s policy to paid-up status upon the death of his or her spouse.
Other important factors in buying long-term care insurance to consider:
• Pick a qualified financial professional who can make sure long-term care fits into your overall financial goals.
• Make sure the company from which you buy has a long track record for service and ethics.
• Check the company’s financially ratings to make sure it is among the industry leaders in financial strength. You want it to be there when you need it.
Do the leg work, and you can feel good about taking this important step toward preparing for your future.
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Article prepared by Northwestern Long Term Care Insurance Co. with the cooperation of Timo Haugen. Timo Haugen is a Financial Representative with Northwestern Mutual Financial Network based in Albuquerque, NM. A financial representative is a licensed insurance agent. He is licensed and appointed to sell long-term care insurance for Northwestern Long Term Care Insurance Co., Milwaukee, WI, a subsidiary of Northwestern Mutual Life Insurance Company—Milwaukee, WI.) Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company (NM), Milwaukee, WI, and its subsidiaries and affiliates. To contact Timo Haugen, please call 505-872-7842 or email him at [email protected].
Northwestern Long Term Care Insurance Company’s long-term care insurance policy contains exclusions and limitations. Northwestern Long Term Care Insurance Company and the Northwestern Mutual Financial Network are not financially responsible for products issued by The Northwestern Mutual Life Insurance Company.
1. Woelflein, Mike, Special to on the Street.com from Employee News; December 2, 2008
2. The U.S. Department of Health and Human Services, Administration on Aging, 2008
3. 2009 Statistical Abstract , www.census.gov. Printed copies available upon request.
4. Employee Benefit Research Institute, July 2005; Society of Actuaries, 2000 Mortality Table.
5. Northwestern Long Term Care Cost of Care Survey, November 2008, Long Term Care Group,Inc. www.nmfn.com/tn/learnctr-studiesreports-cost_ltc.
