Top Five Mistakes
Mistake: Procrastination
We all get busy. Thinking about the potential for needing and paying for care is a topic that is easy to avoid. However, don’t let your fast paced life prevent you from taking time to plan.
Procrastination can have two negative effects:
- Waiting can result in higher premiums. Premiums typically go up 15% with each birthday. When you apply you’re freezing your age and locking in a lower premium, which can provide significant savings over the life of the policy.
- A health change can happen anytime and prevent you from obtaining coverage. Diabetes, MS, Parkinson’s, and other major uninsurable conditions can be diagnosed with little notice.
LTC insurance may not be right for you. However, we encourage you to evaluate coverage before your next birthday. There are now even lowcost plans that allow you to lock in your insurability and buy more coverage at a later date. Planning now will help you make a more informed decision.
Mistake: Assuming you are already covered
If you have not had first hand experience paying for a loved one’s care, assuming your major medical coverage or Medicare will pay for care can be a natural assumption. These plans do not cover any significant portion of longterm care expenses.
Mistake: Assuming LTC insurance coverage is too expensive
While longterm care costs are expensive, an insurance policy to cover these expenses can be surprising affordable. Many financial experts recommend obtaining coverage if premiums can be designed below 7% of your monthly income. Many excellent longterm care plans can be designed for varying budgets.
Mistake: Assuming self-insuring makes more sense
Many members we have worked with could have easily afforded to pay for their own care if necessary.
However, many decide to transfer the risk after closely looking at several factors including:
- Future costs while the annual cost of one year in a semiprivate nursing home is $60,000 today, twenty five years from now is a different story. With an annual increase of 5% compounded, this same annual care would cost over $190,000 per year.
- Tax Advantages – tax free benefits and potential tax deductions for business owners often make transferring the risk more attractive.
- Liquidity – a care event can happen suddenly. An insurance plan can allow time to reposition assets and avoid liquidation expenses.
If you are considering self-insuring, LTCR has sophisticated LTC economic impact modeling software to help you evaluate your options.
Mistake: Assuming you will never need care
Unfortunately we can’t control our health. Many people receiving care today did not plan on needing care. To avoid this mistake, you will need to honestly assess your future and consider what could happen vs. what you want to happen.
- Will you get older? Yes.
- Will health improve ordecline? It is fact of life that our health declines as we age.
- Will a decline in health requiresome type of extended care?
We can’t predict whether or not this will happen but we can plan for it.
