By Mary Alice Hughes & Lisa Bamburg, Co-Owners of Insurance Advantage & LMA Financial Services
Baby-boomers are in many ways experiencing a different “aging process” than that of their parents and grandparents. A 55 year-old adult child may live half-way across the country from his parents today where years ago he most likely would have been closer to home. And the middle-aged daughter is now more likely to work away from the home rather than be a stay-at-home mom or housewife.
One thing that hasn’t changed is experiencing the decline of a parent’s health. Because the adult child is unable to take off work to care for the parent, this decline in health many times results in the need for home health care, assisted living care or even a nursing home stay. It is when care begins that the “boomer” and his parents realize that Medicare doesn’t cover most long-term care (www.medicare.gov).
It is at this point that many “boomers” start looking at long term care insurance for themselves. Unfortunately, many purchase insurance plans that are not adequately designed. They simply look for the best price!
What does a good long-term care plan need to include?
With a combined 25+ years of experience in the industry, we have seen the good, the bad and the ugly. In our professional opinion, a long-term care plan should include three main components.
First, an individual should make some calls or visit facilities to determine cost of care in their area. This will allow the client to start out with an adequate monthly benefit. For example, if cost of care is $7,000 a month and the client has monthly income of $4,000, he may want to purchase a policy with an initial monthly benefit of $4,500 knowing he can use some of his income to supplement the difference.
Secondly, most policies sold today offer a “waiver of home care elimination period”. This allows the individual to start benefits day one if home care is needed. They can keep a higher elimination period for facility care, which lowers the premium somewhat.
Lastly, because the cost of care increases, the individual is foolish not to include compound inflation protection. Whether he needs 3%, 4% or 5% should be discussed with the agent selling the policy. Too many people have purchased policies in the past and then when the need for care arises, they don’t have an adequate monthly benefit. Don’t let this scenario happen to you!
When shopping for long term care insurance, work with an agent who carries multiple companies and has experience in the industry. Don’t try to navigate these waters on your own.