Long-Term Care Insurance

What is long-term care and should it be important to me?

Almost all of us have had at least one experience with Long-Term Care: the various care and services necessary to help meet the needs of people who can’t care for themselves or perform the normal activities of daily living. When thinking of long-term care, we often think of nursing homes. But this field also covers home healthcare, assisted living, and many other additional services related to this type of care. Two primary reasons this financial planning topic is so vital to our clients are:

1) A long-term care need can be costly and can quickly deplete wealth that took years to accumulate, and,

2) It can be estimated that over half of those over age 65 will require some form of long-term care in their lifetime.

My first personal experience with long-term care was with my grandfather in the early 2000s. He was a very healthy man most of his life, having served our country in World War II, then working hard in various jobs all over the country. I imagine it never crossed his mind that his body would eventually break down with rheumatoid arthritis in those years. Unfortunately, this had already begun affecting him by the time I was born, so I never knew the healthy soldier, home builder, or stonemason he was most of his life. Thankfully we have many pictures throughout his lifetime that paint a picture of the man he was.

As for the long-term care process, it began when he slowly became unable to drive. He had a few minor accidents while driving, luckily none of them resulted in any injuries to anyone, but we knew it was time for us to offer to chauffeur him around collectively. Unfortunately, hearing other similar stories, this event often leads to a downhill slide that results in a lack of eating properly, a slipping of the mind, and a continual decrease in mobility and ability to manage daily life. Our family began taking turns staying with him to help him get around, but after months of growing weary of juggling this process with school and work, we decided it was time to explore nursing home care.

Financially, the cost of this care was significantly more than his income from the military and Social Security. For that reason, we went through a stage of financial planning to prepare for him to enter the facility. The process was much more stressful and inefficient than if the family had planned well ahead of time. Granted, the cost of care is high whether you plan now or wait until care is needed, with the average local semi-private nursing home costing over $7,000 per month! However, it’s a flip of a coin if you will need this level of care or not once you reach 65, it is apparent we should at least consider the options for funding care down the road.

With costs so high, you can imagine insuring against this risk can also be expensive. However, there are varying options out in the marketplace today that have additional benefits for costs that might be more reasonable than you think. If you haven’t explored the costs of care and how they can impact your family’s plan, we encourage you to reach out. Discussing the various topics included in our Advanced Planning process is how we navigate together with our clients. Although purchasing this type of insurance to protect your wealth is not for everyone, it is prudent to have the conversation at least, and we’re here to help you determine if it makes sense based on your unique situation.

Skee Orr, CFP®, AIF®, AFC®, is a Senior Adviser with Rather & Kittrell. Skee is available at [email protected].