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Long Term Care Insurance: Is It Worth The Cost?

When discussing your clients’ financial futures, a great deal needs to be taken into consideration. And while there are some factors you can do your best to predict – the approximate year of retirement, for example, and what the cost of living for a given area will be – there are also a large number of events that could dramatically change the course of your clients’ retirement plans. 

Older man in wheelchairIf your clients finds themselves with an extended illness or need the services of full-time nursing care, it can make a huge dent in a person’s savings. That’s why many clients turn to long term care insurance. It sets aside money specifically for the kind of care that isn’t covered by Medicare so your clients’ savings aren’t drained because of expensive care costs.

But is long term care insurance worth the money? Here are some pros and cons you can go over with your client to find out if this form of insurance is right for them:

Pros

  • Long term care is expensive: It’s hard to predict who will require long term care insurance, but it’s important to keep in mind that the healthier you are, the more likely you are to need it. While that sounds counterintuitive, it’s because those in poorer health are unlikely to live as long and may not require long term care. Even those who have money set aside may be severely underestimating how much the care they may need will cost. According to this year’s Genworth Cost of Care Survey, the annual cost for a private room in a nursing home is nearly $88,000. Make sure your clients understand exactly how much they may have to pay for care.
  • Paying for care means less to leave to their family: While many high net worth individuals believe they have the funds required to cover any health care concerns that may arise, the reality is that it will eat away at the savings that they have worked much of their adult lives to amass. This might mean the funds that they intend to leave to their children and grandchildren will be significantly reduced.
  • Insurance grants peace of mind: Financial hardships aside, not knowing whether the proper funds will be in place can have a detrimental psychological effect on your clients. They can be weighed down with the prospect of outliving their savings due to high health care costs and becoming a financial burden on their loved ones. Having long term care insurance in place means they always know their health care will be financially covered.
  • There are options for everyone: Depending on your clients’ expectations and health concerns, they can pick the long term health plan that is right for them. Make sure you work with your clients to help them pick a plan that is both affordable and will give them the coverage they need when the time comes to draw on it.

Cons

  • They may not need it: Since it’s impossible to predict the future, there’s no way for any of us to know what our health trials and tribulations will be down the road. Therefore, there is a chance that your clients will never require long term care and not draw upon that money. Of course, there is a chance that drivers will never get in a car crash, but auto insurance is always recommended anyway. Make sure your clients understand the fact that they may never draw upon this insurance.
  • Situations may change: Again, because no one knows exactly what is going to happen in the coming years, it’s important for your clients to understand what factors may affect their need for long term care insurance. These can be economic, familial or health changes, but they may render long term care insurance unnecessary. It’s also hard to say what the health care marketplace will look like 20, 30 or even 50 years from now.
  • Premiums can be expensive: Depending on the plan your clients choose, the premiums for long term care insurance can be on the pricey side. When coupled with the fact that there is a chance that money will never be capitalized on, many find it to be cost prohibitive.
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