Long-Term Care: Part III–Who Needs It?

In a world of unknowns, there are some things that certain. Here are two: 1) we are all aging, some of us better than others, and 2) the costs for healthcare will not be going down. At some time, we will all need help.

Actuarially speaking, those individuals requiring nursing home care are far fewer than those needing other long-term care. Long-term care doesn’t necessarily mean bed-ridden and on one’s last legs. Any long-term or chronic illness or physical problem can disable someone, requiring assistance in-home or on an outpatient basis. Without insurance, that cost would come out of your pocket, the equity in your home or savings or in some other way that can quickly deplete your resources.

Some people, especially the younger “Gen X” and “Gen Y” individuals who are presently in good health, may recognize the value of long-term care insurance, but feel they have plenty of time to obtain coverage. Notwithstanding the fact that none of us can predict the future and our own health, the cost of waiting could be substantial.

Let’s say a 50-year-old buys a long-term care policy with an annual premium of $6,000. For calculation purposes, we’ll assume the premiums will be paid to age 85. In this example, total premiums would amount to about $210,000. If, however, that same person waited until age 60 to purchase a policy, annual premiums would be in the neighborhood of $14,000 and, by 85, the paid premium totals would be $350,000. In other words, the cost of waiting would be some $140,000; money that could have been used for investments or other lifestyle enhancements.

It is undeniable that long-term care costs are going to negatively impact the financial well-being of millions of Americans and will cause a crisis that will more than equal the current financial chaos faced by this country and our state. Eventually, California and other states may require everyone to have their own long-term care insurance to take the burden off of the state’s resources; similar to mandatory auto insurance. Companies may also be required to provide long-term care insurance for their employees. One way or another, we will all have the coverage and it won’t be inexpensive.

Don’t wait until you have a personal crisis that calls for long-term care. Nature will run its course and we will all need help down the road. Guard against the inevitable and consult your financial advisor immediately, if not sooner.

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About the author: About Ronald Bernheim, the owner of Financial Freedom Wealth Management Services, in Chatsworth, CA. He offers a free, no-obligation counseling session to determine whether a financial review or comprehensive plan is indicated. Interested parties may call (818) 626-9498 or e-mail ronald.bernheim@lpl.com or visit the website at www.ronaldbernheim.com.

Disclosure: All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: California, Arizona, Florida, Washington