Planning
for Long-Term Care
UBS
Financial Services, Inc.
(602)
667-8110 (800) 247-1754
While many people have life insurance, people tend to overlook the need for long-term care insurance. With annual nursing home costs averaging about $55,000[1], a family’s wealth could easily be depleted by a nursing home stay. It makes sense to become informed about the possible need for long-term care and the various ways you can pay for it, including insurance, before you are in an emergency situation.
Advances in health care and our increasingly higher standard of living
have made it possible for many Americans to live at least until their 80s. As
we age, however, we face the growing likelihood that we may experience a need
for long-term care. This may mean that we might become physically unable to do
the routine things that must be done to live independently, or end up suffering
from a cognitive impairment such as Alzheimer’s disease that necessitates
constant supervision.
Many elderly Americans are cared for at home or in their children’s
homes. In fact, it’s estimated that by 2005, one in three workers will be
caring for an aging parent. Many people
prefer to remain at home, rather than enter a nursing facility. This may mean
that a spouse or child(ren) will care for a dependent family member for a time,
but resources may eventually be exhausted, or it may become unsafe or
impractical to care for the individual at home.
Could It Happen to You?
Most of us
dread the possibility of losing our independence—or watching our spouses or
parents lose theirs. However, putting on blinders won’t change the fact that
more than half of all women and a third of all men who survive to age 65 are
expected to spend some time in a nursing home.[2]
What Are Your Options?
There are
various options from which to choose. You and your financial advisor need to
determine which is most appropriate for your particular situation. These
options include self-insurance—in other words, paying for your expenses out of
pocket as they arise—or purchasing
long-term care insurance to provide benefits when needed in the future.
Here are some questions you need to ask yourself when making this
decision:
As a family tries to support an aging member, they will be presented
with a mosaic of professional care options, which include:
Facing the Financial Realities
Families
are often forced to redraw their financial plans when a member requires
long-term care:
For many, financial realities dictate the choice of care. Long-term
care can be expensive—so expensive that one illness can drain a lifetime of
savings.
Planning for Long-Term Care
There’s no
way to foresee what type of long-term care any individual may require. However,
a familiar tool—insurance—may help protect individuals and their families
against an unpredictable outcome.
Many different types of long-term care insurance are available, from
numerous providers. Some plans cover a range of care options, across the
continuum from home care to day care to residential care. This flexibility can
be important as an individual struggles to maintain as much independence as
possible. Some plans are tax-qualified, providing deductible premiums and the
assurance of non-taxable benefits. These plans, however, may have more
stringent benefit eligibility triggers.
Long-term care insurance policies vary a great deal. Focus on the
details to make sure the policy provides what your family needs. Some features
and benefits to consider include:
Ø Inflation protection Survivor benefits Discounts for couples or good health
Aside from the question of what a policy covers, there’s the issue of
how much coverage a particular policy provides and for how long that coverage
is provided. Comparing policies can be complicated, but three long-term care
policy 'building blocks' will help you assess the extent of the protection
offered:
A Financial
Advisor Can Help
Long-term
care insurance can be a component of your overall financial plan. Ask
a financial advisor to help you assess your need for this type of
insurance. Some financial services firms have established relationships with
selected groups of long-term care insurance providers. If you are interested in
the protection long-term care insurance can provide for your family, a
financial advisor can help you compare coverage and plans.
Insurance products (including long-term care) are made available by insurance-licensed subsidiaries of UBS Financial Services through third party insurance companies unaffiliated with UBS Financial Services.
UBS Financial Services does not provide tax or legal advice. Your clients must consult with their attorney or tax advisor regarding their personal circumstances.
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