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Money Girl
078 MG Long Term Caring by Near Term Planning
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This is guest host Andrew Horowitz from the Disciplined Investor podcast. And today on Money Girl, I'll be discussing the basics of long-term care insurance and tips on a new policy design that may actually be wallet friendly. Are you approaching retirement age and wondering what you'll do if you can no longer care for yourself or your spouse into the future? Maybe you have a parent that is starting to lose their mental faculties or might need someone to care for them soon. There are over 77 million people in the United States classified as baby boomers that are just now turning 60 and are considering if retirement is an option. They make up a whopping 27 and a half percent of the overall population. While many people don't like to discuss the possibilities of what can happen in the future, it is something that needs to be discussed and planned for. Depending on what happens and what the person's needs are, there are nursing homes, assisted living facilities, adult daycare, and at-home assistance. These all have varying price tags associated with them, but the underlying reality is that none of them are cheap. Let's face it, good care is expensive. Today, a nursing home can range from $150 to $300 a day. That's an average of $70,000 per year or more. Phew, that is higher than many husbands and wives' salaries. Combined, we know one thing, health care prices will continue to rise, especially since the industry is expecting so many more clients with a baby boomer generation transitioning into this stage of their life. That is why long-term care insurance has become so important and a significant component of the revenues for the insurance industry. Remember, while you may not be in an age range to need the coverage just yet, there may be someone older who will soon need to rely on you for care. Long-term care insurance is coverage which provides the funds to cover the cost of assistance, just as we have seen with other forms of insurance. There can be several different policy structures and varying ways to pay for it. There's an old African proverb that says, "For tomorrow belongs to the people who prepare for it today." So even if you don't think you'll ever need long-term care or insurance to cover it, you might want to at least look into it because the future has a strange way of being well uncertain. Traditional long-term care insurance policies require you to pay a premium which will pay the insurance for long-term care should it ever be needed. Depending on your age and benefits of the plan, these are not cheap and may cost anywhere from $2,500 to $5,000 per year. To be honest, that's a lot of money to throw away on a plan that you might use or you might not. It seems like a hard pill to swallow. The good news is that today, there are plans that provide an alternative in case you don't use the policy. Basically, it combines some of the benefits of a long-term care insurance plan with a savings plan. Since this is a relatively newer side to the industry, not every agent may have this in their product mix. But this newer long-term care insurance product design is getting a good deal of attention. It's a policy that allows you to combine the features of a life insurance policy and a long-term care plan into one. The main difference is that the premiums are all paid in a lump sum in order to provide the long-term care protection and the component that provides for a refund of the unused premium. Hey, it's Austin James. Yes, I'm living with diabetes, but it doesn't have to define me. Thanks to the Freestyle Libre 3 Plus sensor, I get real-time glucose readings throughout the day. The Freestyle Libre 3 Plus sensor is small and easy to wear, giving me the freedom to focus on my life as a parent and a musician. Now this is progress. You can get a free sensor at freestyle Libre.us. Offer available for people who qualify. Visit my freestyle.us to see all terms and conditions, certain exclusions apply. Data on file, appetite, diabetes care, or prescription only. Safety info found at freestyle library.us. September is a great month for planning. We start thinking about the rest of the year, whether it's back to school, big year-end work projects, holiday plans or travel. Planning ahead is crucial in life, especially when it comes to what happens when you're gone. Getting life insurance may sound daunting, but policy genius makes the process a breeze. With policy genius, you can find insurance policies that start at just $292 a year for a million dollars of coverage. Some options offer same-day approval and avoid unnecessary medical exams. Policy genius's technology lets you compare quotes from America's top insurers and just a few clicks to find your lowest price. It's the country's leading online insurance marketplace. And if you ever need help or guidance, they have an expert license support team to answer your questions, handle all the paperwork, and advocate for you throughout the process. It's never too late to plan ahead. Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Skin feeling rougher than sandpaper? Don't let it ruin your day. Try new dial exfoliating bodywash with a touch of creamy cocoa butter, orange extract, and vitamin E. Reveal soft and glowing skin after just one shower. Dermatologist tested in pH balance for a deep yet gentle clean. Dial up your day. The process of obtaining this type of policy is fairly simple. You fill out an application and pay the one-time premium, which earns interest and can be used to cover future nursing and long-term care expenses if needed. Let's look at an example. A person invests $70,000 into a long-term care policy. They have the added feature of a $70,000 money-back guarantee if they choose to withdraw or cancel their policy under certain conditions. Then there's the life insurance component that amounts to $118,000 in tax-free payment for the beneficiary if the insured dies and $236,000 for payments of long-term care benefits as per the policy. The real benefit is that there is a feeling of relief knowing that you or your loved one will be taken care of no matter what your health in the future and your family won't have the burden of the expense. The last thing I would want to do is to be a burden on my family or put undue stress on them in the future. Now, with so many different policy options out there, how are you supposed to know if this is a good plan option or not? Here are some tips for navigating the insurance policy jungle. One thing you'll need to realize when dealing with the future is that it's difficult to define your long-term care needs since it's unknown. Private insurance is expensive, so be prepared. This market is continually changing and thus will have uncertainties to it. Remember to look at the policy details as there is the possibility for changes in the future as far as premiums and maybe the benefits. Look to lock in everything that's possible. Look for inflation protection. This may seem expensive in looking at the initial premium cost, but may be less expensive than a 5 to 10% increase over the next few years. Prices for assisted living and nursing homes vary across the country, so look at the prices in your area before selecting a plan. There are no guaranteed premium policies, so be aware. Make sure the policy you consider covers assisted living in home care and nursing home care. Some policies will seem to cover all of these, but by reading the fine print, you'll see that they have stipulations. It may seem confusing and exhausting, but I'm confident that you can make your way through the insurance maze and back out alive. Remember, you're protecting yourself and your family for the future. Cha-ching, and that's all for now. Thanks for tuning in to The Money Girl. This is Andrew Horowitz, sitting in for The Money Girl. I invite you to listen to my weekly podcast, The Discipline Investor, also available on iTunes. And don't forget this, more information in the transcript of the show notes on qdnow.com. As always, everyone's situation is different, so be sure to contact a tax or financial advisor before making important financial decisions. 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