Buying this special insurance to protect your savings means:
- You have peace of mind knowing you won’t burden family to assist. They will be free to manage the professionals providing your assistance, help as they can, plus care about you.
- You can be as independent as possible in your home and retain your dignity since you have funds to hire assistance.
- Children won’t have to face the difficult and emotional tasks of helping parents with personal functions such as using the toilet!
- Conflict won’t develop between sons/daughters, over spending parent’s saving nest egg for one vs retaining funds for the other.
When a financial services industry insurance protection plan has lots of media coverage it would be considered a good thing. However, the recent coverage on Long Term Care insurance has been reports about people receiving premium increases!
One question people reading these reports might have – Why are the companies doing this? There are many reasons but the primary ones are:
+ People are living longer and thus as “their parts wear out” about 70% will need some help with day to day life activities.
+ The cost of these special assistance services, here in Connecticut, is some of the highest in the US so it takes a lot of premium to pay these expenses.
+ Economic conditions have resulted in interest rates being very low for some time. Thus, the interest received, from the premiums companies invest in interest bearing accounts, has been very low. This low return does not cover the ever increasing current and anticipated future expenses for the assistance people need.
Some might react to the news and say – The premium is now too expensive so I think it’s a mistake to invest in this financial protection. Yes premiums have been going up and it is certainly too bad this had to happen. The question however becomes, which mistake would you prefer?
First: Using up your savings nest egg paying for high cost assistance, becoming poor, and then ending up being a big burden on family.
Second: Investing in this insurance and then not having to use it! It’s just the same as paying for home and car insurance and not having to use it, which people accept as normal.
It is also important to keep in mind – assistance is so expensive so the amount of premium a person pays, even though it has been going up, is still really pennies in comparison to the big cost of help. The value of this investment can be seen in the return a person with a policy could receive. For example, if a 55 year old pays the premium for a four year benefit period policy with certain benefits, for five years, all the money paid in could come back in benefits in just 78 days! After paying premium for twenty years they could break even in six months (189 days).
More information about the value of Long Term Care insurance can be found on – http://longtermcareins-ct.com/value.php
People who protected themselves financially, in case a need for high cost on going help happened, did so by investing in this important kind of insurance. They report they took action because:
- They did not want to burden family or others.
- They want to be in control so they can make their own decisions on the type of assistance and where it will be received.
Many others who put off taking action to protect themselves may find themselves facing things like:
- A quick loss of savings if assistance were suddenly needed. Why? The cost of long term services and support in Connecticut are some of the highest in the U.S.
- A higher premium when they apply later. Why?. Rates are 33% higher at 55 vs 50 and 60% higher at 60 vs 55!
- Not being able to obtain coverage. Why? They are now uninsurable because a change in health!
These short stories from six people highlight how Long Term Care insurance helped them and their family. These videos were published by LIFE (the Life and Health Foundation for Education)
When we look around at the probability of needing help at some point we find it is quite high. Even when the facts are there many people have not taken action to protect themselves. Thus, the question becomes – Do stories like you can see in these videos help you better understand the need to take action by investing in this important kind of coverage?
Let me know what you think.