Long Term Care Insurance. It’s something we BA50s need to know about it. But it’s also a topic many of us are good at avoiding. Here’s the catch. According to Ted Kadison, President, IRG Financial Services, Inc., think about removing the word “insurance” and replacing it with the word, “money.” Now would you listen? We thought so. After all, we’re grownups, right? We need to know about this stuff and take it seriously. After all, we’re at the age where we – or our spouses — might get sick. In fact, we probably will. We’re also at an age where we need to make tough decisions with our elderly parents. According to statistics, two out of five of us will eventually need long term care at some point in our lives. So, how do we prepare, especially when you consider that neither health nor disability insurance covers long-term care, leaving guess who holding the purse strings? We sat down with Ted to get some answers.
BA50: So the million dollar question is: What do we need to know about long term care insurance?
Ted: First, think of insurance as either creating wealth which is what life insurance does, or conserving what you already have, which is what we mean by long term health insurance. It’s really simply about the utilization of money.
Certainly, the insurance question is very personal according to your lifestyle and your savings and what kind of family situation you’re talking about. When you buy insurance it’s a gamble – you are betting against yourself. But keep in mind, you have others in your family to think about. For many people, there is a big concern that they will spend more on premiums than we will receive in benefits when we die.
BA50: Is there one piece of advice you have?
Ted: Yes, you need to plan and be realistic, especially when you realize that one year in a nursing home can run upwards of $100,000 per year; that’s a million dollars over ten years.
You want to be able to sleep at night and not worry about all the “what ifs?” Maybe you think you have enough assets and so why pay premiums today, but then you worry that your spouse could get Alzheimer’s or cancer and the expense of this could go on forever. Remember, if you don’t get, you will be footing those financial gaps, meaning it’s coming out of your pocket.
BA50: So do you just set aside some money and use it when you need it and hope you will have enough – or do you get long term insurance?
Ted: A three-year illness can easily run you $300,000. You can argue that you don’t need it. But there’s a comfort factor that Long Term insurance gives you. I’ll give you an example: When I found out my mom was going to need 24 hours of at home care, I was at peace with it because I had a policy in place to take care of it. This is not something you want sprung on you out of the blue.
Obviously, I’m a fan of long term insurance. I believe in it. And I know that investing in it can save you money. Most of us can’t afford the risk not to invest – who has an extra $100,000 or so lying around? To find the best policy for you, do your research and shop around. The security is worth it.
There is so much more to ask – and add here. Please post your questions in comments at end of this article and we will address them in our follow up piece. Feel free to also send questions regarding long term care and Ted will try to answer. We are not selling insurance on this site but BA50’s are buzzing about this topic; it’s something we all need to figure out. Stay tuned for Part Two.
Additional Resource: Life Insurance for Elderly Seniors