Easing the Family Burden: Why Long Term Care Insurance Can Be a Smart Idea

FAI - Long Term Care

Once you reach the age of 65, you have a seven in ten chance of needing some type of long term care service in your lifetime.

That’s a sobering thought, but the fact is that the likelihood of requiring long term care services increases dramatically as we age. With advances in medical science and people living longer than ever before, the probable need for long term care has become a fact of life. Still, long term care is expensive, and it will continue to become more costly in the future. It can quickly drain savings and create financial and emotional burdens for family members. Research has shown that family caregivers often experience both health and financial issues as a result of these additional responsibilities, and no one wants to be a burden to their loved ones.

Don’t assume Medicare or other health insurance will help offset the cost of care.  The most common type of long term care needed is custodial help, which includes assistance with daily activities such as bathing, dressing, grooming, meal preparation and eating. Health insurance, Medicare and Medicare Supplemental Insurance don’t pay for any custodial care, and they pay for a limited time towards skilled long term care, such as a nursing home or assisted living facility. That’s why purchasing long term care insurance can be a smart idea. These policies pay for all types of care, whether it’s at home or in a care facility. Some plans even provide additional benefits such as case management and respite care.
 

Here are some of the many ways that buying long term care insurance can ease the burden on your loved ones and protect your savings:

  • You’re in control. Most long-term care policies allow you to choose the care setting you and your family desire once you qualify for benefits. While nursing home care is one option, most policies provide benefits for care at home, adult daycare and assisted living as well. The decisions about the type of care and providers are left to you and your family, easing concerns about quality.
     
  • Preserve your lifestyle. Because people are living longer, it’s entirely possible that both you and your spouse will be living when one of you requires long-term care. If you’re paying for the cost of care out of your own pocket, it’s likely to have a significant impact on your retirement savings and your standard of living. Long-term care insurance protects your assets so that your lifestyle isn’t dramatically altered.
     
  • Reduce the burden on your adult children. If you require extended care and don’t have insurance, the caregiving responsibility will fall to your family members. That role may prove too challenging for an elderly spouse, so that means your adult children may need to step in. Caught in the sandwich generation, with responsibilities for their own children and careers, the caregiver role can be exhausting. That’s where health, finances and even marriages are often impacted. Long term care insurance provides the resources for quality care in the setting you and your family desire, reducing the worry and strain on your adult children.
     
  • Lessen the stress among siblings. Without an advance plan in place, the responsibilities of how to manage and provide care will often fall to your adult children, typically the one who lives the closest to you. If other siblings live farther away, they may not realize all that’s required in the day-to-day role of being a caregiver. Even strong sibling relationships can fracture in this situation. A long term care policy can eliminate much of this strain and resentment.
     
  • Tax incentives. There are several tax incentives used by state and federal governments to encourage the purchase of long term care insurance. Many states offer tax credits and deductions. Federal tax incentives include allowing the use of health savings accounts (HSAs) to pay long-term care premiums and a tax deduction for premiums paid by employers or self-employed individuals.
     
  • Gain peace of mind. As people get older, they worry about who will take of them or how they’ll be able to pay for the care they may need. If you buy a policy, it will eliminate this worry, knowing that the risk has already been addressed.
FAI - Long Term Care Couple

What about the cost of long term care insurance?

While each insurance company is different, premiums are based on your age at the time of application, your health at the time of application and the total amount of benefit you wish to have. Most people purchase these policies when they’re in their 50s, but individuals in their 40s and 60s often buy them as well. It’s important to act while you are in good health as the cost for long-term care insurance is highly dependent on your physical condition. Many people believe that buying a policy later in life will help them save on premium costs. In reality, the longer you wait, the more expensive your options become and your risk of becoming uninsurable increases.

When you consider the many financial and emotional issues that come with aging, long term care insurance is a smart way to address these concerns. These policies safeguard assets and ease the family burden while providing you with options for quality care. To learn more about long term care planning and the steps you can take now to protect yourself, please contact our helpful advisors.

About FAI Wealth Management, Inc.: Located in Columbia, Maryland, FAI focuses on helping clients create the financial future they desire by protecting their wealth, making the most of their assets, and planning for life's uncertainties. The firm combines fee-only, fiduciary-driven guidance with highly personalized, consultative financial planning and investment services that enable individuals, families, and businesses to navigate complex life transitions. Founded in 1987, FAI currently manages more than $350 million in client assets nationwide. For more information about FAI Wealth Management, please visit the website at https://www.faiwealth.com or call 410.715.9200.

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