Making the best of long-term care

There is nothing that can deplete retirement funds more than extensive health care and long-term care costs. During client review meetings, we believe incorporating a discussion regarding long-term care insurance is an important facet of a holistic financial plan.

At some point in our lives we have either experienced personally or know someone that has seen a family member go through a long-term care situation, become a primary caregiver for a loved one or gotten diagnosed with a daunting health issue. You don’t want to be put in a position to have to take action after a health emergency has taken place, in an attempt to properly protect your finances.

Ideally, having these discussions early helps the client weigh the available options and decide what is the best approach for their circumstances (whether it’s a certain type of insurance policy and/or some type of legal trust document) and what the benefits/costs associated with those options are.

When considering long term care insurance, how can individuals make the long-term care coverage best work for them?  One tip when purchasing long-term care insurance is to consider adding a cost-of-living rider. Adding this type of rider helps the policy keep up with cost of living increases. As with all other features available in this type of policy, it should be discussed in more detail with an insurance professional.

One of the biggest concerns with long term care insurance is what happens if you never use the policy.  It’s the “use it or lose it” dilemma. An alternative to the long-term care insurance is a certain type of hybrid life insurance policy with a long-term care rider. If the long-term care rider is never used and the policy holder has passed on, then the beneficiaries will receive the full death benefit.

In addition to the long-term care discussion, other frequently asked questions arise such as – are your estate planning/legal documents in order?  When was the last time that you reviewed and updated your Wills and Durable Power of Attorney’s (Financial, Health & Medical Directive/Living Will)?  Do you have these basic legal documents in place? What are your wishes in the event that you can no longer handle your financial and healthcare affairs due to incapacitation? Have you established a Trusted Contact that can be contacted if financial exploitation is suspected?

By having these types of conversations with our clients, this helps us determine whether there is a need to incorporate another professional (insurance, legal, etc.) to be a part of the discussion and to come up with the best solution for our client’s personal circumstances and finances.