Archive for March, 2012

Everyone Has A Long-Term Care Story

Everyone Has a Long Term Care Story

The era of Long Term Care is still new enough that people have stories that resonate deeply when told.

This is similar to life insurance in the first half of the 20th century. A typical story at that time may have been the father who died in his 30’s from pneumonia or an industrial accident, and left his six children and wife without any income. As insurance companies developed affordable products, families purchased them in droves. Fear motivated people to ensure that the fate of the family of six children did not befall them.

Today, life insurance is more often than not driven by a logical analysis of the numbers and statistics. It is still bought to protect the same need but the gut wrenching fear is rarely found.

Not so in Long Term Care situations. The parents and grandparents of today’s 40 and 60 year olds did not plan to live to age 90. They did not plan to develop Alzheimer’s or live through a stroke or heart attack. Nor did they know that their savings and Social Security would not provide the ability to care for their spouse or themselves.

Ronald Reagan was president of the most powerful country in the world, then he required constant care and supervision due to Alzheimer’s. Christopher Reeve was a successful actor with a young family, and then a quadriplegic who required 24 hour a day skilled care; still with his young family.

It’s not only famous people, of course. My healthy 72-year-old uncle who danced and flirted at my wedding in 2003 had a stroke in 2004. He is completely dependent upon my aunt for all his needs today.

They sold their house and moved to an assisted living apartment in order to preserve her health and financial stability. While his health had been severely compromised he has 10 grandchildren and he doesn’t want to miss a day of their growing up.

For those of you who think they are too young to buy the insurance, this story is for you. A president of a small company decided to put in a Long Term Care program for his key people including himself. He was only 54 but recognized the need due to his family history and liked the tax-advantaged benefit it provided. He decided in March but didn’t get around to the application until May. In April he suffered an episode of dizziness and was unable to speak for about 30 minutes. The doctors put him on a mild medication and told him they would watch it. Their diagnosis: Transient Ischemic Attack (TIS). Insurance results: Postpone for one year. A TIA is a precursor to a stroke.

Now that you have heard the emotional story, here are the logical reasons. Compare the cost of buying the insurance today versus waiting 10 years. If you deposit your premium amounts for 10 years, you will need to earn between 10 and 11 percent net after taxes to equal the savings generated by buying it younger. If you experience a stroke within the next year you won’t be able to buy it in 10 years. You will have already paid for your Long Term Care out of your own pocket.

Some of you may be thinking, “Well I have plenty of money to take care of myself.” I do acknowledge that this is the case for some people, and some do choose to self insurance. But here is my next question…how do you want to spend your money? Would you rather spend $3,000 per year for 20 years (total cost $60,000) or spend $200,000 per year 20 years from now? You would receive your premium investment back in just four months in a nursing home.

A friend of mine who is a Long Term Care specialist in California told me the story of her clients who were worth over six million dollars but wanted Long Term Care Insurance. When asked why they wanted the insurance, they replied, “When we are incapable of making our own decisions, we don’t want heirs deciding whether or not to spend their inheritance on our care.”

Another story I tell to my wealthier clients has nothing to do with Long Term Care Insurance but everything to do with our spending habits. My condominium had discreet water damage to our wallpaper and floors during a bad storm soon after I moved in. Not for a minute did we consider spending our hard earned money or time on repairs. My wife and I could live with it. Then, the condominium manager left me a message that I had a $7,000 settlement coming to me to replace the floor and wallpaper. All of a sudden I found the time to look for some new wallpaper. I tell prospective insured, if you have the insurance you will have the extra medical test done, you’ll have the floor replaced and you’ll hire that extra home health care that will make your quality of life the best it can be.

Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
Email: AG@AbeGlickman.com

“It is better to create a plan 10 years too soon than one day too late.”

Questions or Comments? Give me a call!