Long-term Care Insurance Makes Great Birthday Gift

“Long-term care insurance makes great birthday gift” is the title of a well-written, accurate, concise MarketWatch article by Robert Klein. (Of course, long-term care insurance (LTCi) also makes a great Mother’s Day, Father’s Day, Christmas, Kwanzaa, etc. gift!)

Part of what makes this column so great is how well Mr. Klein supports his advice. He writes, “More than 90% of participants in a 2010 Age Wave/Harris Interactive survey sponsored by Genworth hadn’t even talked about critical extended-care issues with their spouse/partner, aging parents or adult children. This was the case despite the fact that 55% of respondents reported that their greatest fear regarding an extended care illness or event was being a burden on their family.”

Almost 70 percent of those turning 65 will will need long-term care at some point in their lives.

These are scary statistics. Yet the public still fails to face these and other truths. Way too few of us own LTCi.

He also writes, “What wasn’t widely reported until recently, and is the real reason for having an extended-care plan, is the financial, emotional, and physical impact of an extended-care event on primary and secondary nonprofessional caregivers. Genworth’s “Beyond Dollars – The True Impact of Long Term Caring” research, which was initially published in 2010, did an excellent job of documenting this.”

From what I’ve witnessed over past 24 years selling LTCi, the emotional and physical reasons for owning LTCi are at least as compelling and important as the fact that LTCi conserves wealth.

I’ve blogged about Genworth’s “Beyond Dollars – The True Impact of Long Term Caring” study before. Since Mr. Klein laid these facts out so clearly and plainly, I’ll re-publish them”

• “The average age of primary care givers is 53, with 42% caring for a mother, 14% for a father, and 13% for a spouse.
• 42% reported that the care recipient resided in their home for a period of three years or more.
• The financial impact was widespread, with 83% contributing financially, 63% reporting lost income of an average of 23% of household income, 61% reducing savings by an average of 63%, 57% dipping into their own retirement funds and/or savings, 45% cutting back on their own family expenses, 40% reducing family vacations, and 29% borrowing money, taking out a reverse mortgage and/or selling their home.
• 57% provided care for more than 16 hours each week and 31% provided care for more than 30 hours each week.
• Over a third reported direct negative consequences to their own careers, including 44% working fewer hours, 48% lost a job, changed shifts and/or missed career opportunities, 38% incurred repeated absences from work, and 17% found themselves repeatedly late for work.
• The impact on family and relationships included 44% experiencing an increase in stress with their spouse, 27% reported stress with siblings, 23% experienced an increase in stress with their children, 20% reported reduced time with children, and 58% reduced savings for college education.”

My only qualm with Mr. Klein’s important, beautifully written, lucid column is perhaps his unrealistic advice that the lack of LTC planning can be solved fairly easily. Kids should consider paying for their parents LTCi using strategies such as “gifting” LTCi premiums to parents.

The problem with his advice is that kids who are in a position to pay LTCi premiums for their parents are probably at least in their forties. Therefore, their parents are probably at least in their 60’s. Traditional LTCi is pretty difficult to obtain once people enter their 60’s. Not only are prices higher, but qualifying for the coverage health-wise may also be a challenge. The mean LTCi buying age in the US is about 57 years old.

As an aside: we do have excellent asset-based LTC products that might provide a solution if traditional LTCi is out of reach.

The bottom line: do your LTC planning NOW, don’t wait!