Estate Planning: “Long Term Care Coverage – Do you need it?”

The answer:  it depends.

Most financial advisors will tell you that long-term care insurance is at the very least important, and perhaps, essential.  I tell my clients to talk to their financial advisor because it is an investment decision – you need to make sure it makes sense for your financial circumstances and plans. In my experience, each individual or couple should very carefully consider their individual health issues, their financial assets, and their comfort level with risk in general. Every individual is different from the rest, and each couple is uniquely situated to look at this question of whether they require Long Term Care Coverage (LTCC).

Most people want to know when they should consider LTCC.  It is never “too early” but, as you can imagine, the older you get, the more expensive coverage can get. So, now is better than later, but check it out, no matter what your age.

Here’s the advice I give to those who ask me about it:

1) Talk to a financial consultant or planner – someone who can look at your financial assets, income, and risk aversion and give you some scenarios to work through, some “what if’s.” Once you’ve done that, it may interest you to know that there are insurance agents who specialize in this kind of coverage. If your financial advisor is telling you that your circumstances suggest that this is a good investment for you, you should go on to step two.

2) Find a LTCC specialist, who works for a qualified insurance company (qualified by the State) and who could walk you through some of the products for which you may be eligible. Some larger insurance companies have an employee that handles just LTCC. Some insurance agents will tell you they sell LTCC as just another type of insurance they offer along with all the other types (auto, home, life, etc.), but only a specialist will have the experience with the complexities of LTCC, the knowledge of how LTCC has changed over the last 25 years, be able to answer your questions with confidence and accuracy, and explain exactly what your options are and how to purchase and weigh those options in the best way.

Remember, one must medically qualify for this type of insurance. In other words, you’re probably going to be interviewed, your health records will likely be required, and your doctors will be asked for their opinion on your health. Then, the insurance company will either grant or deny you and opportunity for coverage. If they grant you the opportunity to purchase their product, they will decide how much your coverage will cost based on their assessment of your age and health conditions. (There are breaks, by the way, with most companies for married couples.)

Then, the next decision is up to you, or you and your spouse. Can you afford it?  Is the investment going to protect you in the way you wish to be protected? Some people choose it to avoid the potential need for public assistance. Others are planning to leave something for their children to inherit and can’t be confident their assets will remain safely intact for their children if one or both of them have a catastrophic illness. But, what if you have no children or others for whom you’d like to  “protect” your estate if they survive you? That changes the equation dramatically.

Be sure to run the numbers and understand what kind of protection you are actually purchasing. Most policies have flexibility built in or purchasable as “add-ons.” And, many of the newer policies allow you to choose how many months of insurance you’d like to purchase and at what rate of support per month. Some companies will even allow you to set your policy up to be returned to your beneficiary if you pass away never having used the policy.

The bottom line:  although LTCC may be a good idea for you, it’s not necessarily so for everyone.  Talk to advisors you trust, know your goals for your retirement and beyond, understand your risk aversion, and run your potential scenarios with and without LTCC before making a decision.

Here’s an article from nextavenue.org that I thought some might be interested in reading on the subject:

http://www.nextavenue.org/article/2014-04/how-get-good-long-term-care-coverage?utm_campaign=April.10.2014.Newsletter_NA&utm_medium=email&utm_source=Eloqua

ALL READERS:   This blog is not, nor shall it be deemed to be, legal advice or counsel. This blog does not create an attorney-client relationship with any reader.  It is designed to encourage thoughtful consideration of important legal issues with the expectation that readers will seek professional advice from a licensed attorney.