While many people fail to plan ahead for long-term care, creating a plan is crucial for future care that may be necessary. Naturally, most people prefer to avoid thinking about getting older, developing a disability, becoming less independent and having to rely on others for care. However, as the old adage goes, “Those that fail to plan, plan to fail.” Long-term care (LTC) can quickly wipe out a lifetime’s savings when it is not planned for.

Long-term care can include:

-           Home-based care such as home health aides

-           Community-based care such as adult day care

-           Facility-based care such as assisted living facilities and nursing homes

A survey from The Associated Press-NORC Center for Public Affairs Research shows few Americans age 40 or older are prepared for long-term care, and even fewer understand the financial costs involved. The survey also showed Americans 40 or older are counting on their families to provide assistance for them as they age. According to a study from the U.S Department of Health and Human Services, 70% of people turning age 65 can expect to use some form of long-term care during their lives.

Choosing the right plan to pay for long-term care depends on your unique financial situation and goals. Many people believe they have no need for additional LTC protection because the government will take care of them. However, the government has very tight restrictions on its LTC Medicare and Medicaid programs. Medicare will cover only skilled nursing care and that must follow at least three consecutive days of hospitalization. Medicare will only fully cover the first 20 days of your stay. After that, you have only 80 days of coverage left, and that coverage is only available only after the coinsurance is paid.

Long-term care insurance is a viable option that covers many types of long-term care. Your exact coverage will depend on the type of policy you buy and what services are covered. You can purchase nursing home-only coverage, or you can choose a comprehensive policy that includes both home care and facility care. With long-term care insurance, you can utilize an existing asset — typically money you currently have in CDs, savings, annuities, IRAs, or retirement plan funds — as your guaranteed single premium. The use of purchasing a life insurance policy specifically designed to use the insured bucket of coverage with a dual purpose.  To draw down the coverage during your lifetime to pay for LTC care or use as a death benefit to your heirs upon your passing.  This allows you to avoid ongoing, non-guaranteed annual premiums usually required by other forms of long-term care insurance. Accordingly, your money can work more effectively for you in case of long-term care expenses.  It can also be a significant addition to your estate. Some carriers also offer a refund of cash value built up in the life insurance policy if surrendered at no cost after a specific holding period has expired.  Be sure to review all LTC proposals and specific benefits offered carefully prior to purchasing.

Affluent clients have cultivated their wealth by understanding risks and planning accordingly. They understand the importance of numbers, but also take their unique financial plans and circumstances into account to make wise choices. This same approach is recommended when considering long-term care insurance.

Whether you are an individual or family looking at the risks, costs and benefits involved with long-term care insurance, contact Global Planning, and let us help you determine if long-term care insurance is a smart way for you to achieve peace of mind and efficiently plan for you or a loved one’s financial future.

For more information on other retirement topics of interest, go to www.GlobalPlanning.com or email retire@globalplanning.com.

Advisory and Financial Planning Services are offered through Global Planning, Inc®., a Registered Investment Advisor and separate entity from the Securities that may be offered through Independent Financial Group LLC., Member FINRA/SIPC.