Who can benefit from Long Term Care Insurance?
In the 90’s my grandmother had to go to a nursing home, and had no choice in which home to go to because she had no long term care insurance. She used up all of her assets very quickly, and then was covered by Medicaid. She was never quite happy in the nursing home, and I always wished we had other choices available.
Long term care insurance is a tool for those who want to remain independent and desire the ability to choose the setting for their care. While it was begun in the early 80’s as nursing home insurance, it has changed a lot since then. Now the coverage includes not only nursing home care, but services in assisted living facilities and adult day care centers, as well as home health care, and respite care for the care giver.
As we live longer, more people will need some form of long term care. Yet most of this care is increasingly provided at home. Over 12 million Americans (of any age) need long term care, but only 2.4 million live in nursing homes. Further, younger people often have need of this care as well. It is estimated that 40% of the people receiving long term care are between ages 18 and 64.
What triggers long term care insurance? Usually a policy pays benefits when you cannot do two or more “Activities of Daily Living” (ADL’s), either because of old age, mental or physical illness, or injury. There are six activities of daily living, developed through years of research: eating, bathing, dressing, toileting, continence, and transferring (getting out of a chair or bed). Many policies also pay benefits for cognitive impairment – for example, if you develop Alzheimer’s disease, but can still perform the ADL’s.
If you have significant savings, long term care insurance is a way to protect those assets in the case that you need long term care. Consider the costs of care in a 2008 survey. In Seattle a room in a nursing home cost $277 a day, and the rest of the state averaged $189 per day. A one bedroom unit in an assisted living facility cost $3,340 per month in Seattle, and $2,890 in the rest of the state. A home health aid costs $22 per hour, or just over $45,000 per year. These costs could quickly consume a very healthy savings account.
When looking for long term care insurance, keep in mind these questions. What services are covered, and how much would be paid for each service? How long would the benefits last, and does the policy have a lifetime maximum benefit? Will it pay benefits based on expenses incurred, or a set dollar amount? How many days would you wait before benefits begin? Does the policy offer an inflation feature? Is there a waiver-of-premium provision for once you enter a care facility?
Then, based on your age, and family situation, you can map out your goals for long term care insurance with an insurance professional, and craft a policy that works best for you.
Showing posts with label insurance. Show all posts
Showing posts with label insurance. Show all posts
Tuesday, August 4, 2009
Monday, August 3, 2009
Six Reasons to get Life Insurance
Why do I need life insurance? Here are 6 fundamental reasons…
Since life insurance is something many of us put off for another day, let’s think about reasons why we should act now. And ask yourself, how much is it about me?
Reason #1: to pay for final expenses. Even if you are single, your passing will put a burden on others if you don’t have any life insurance. Do you know how expensive those costs can be now?
Reason #2: to replace your income. If you have a spouse, and especially if you have children too, your life insurance can take care of them for some time after you pass on.
Reason #3: Create an inheritance. Even if this is your only asset you leave, life insurance is a leveraged way to leave an inheritance tax-free to whoever you name as beneficiaries.
Reason #4: Pay your estate (“death”) taxes. By paying these taxes with insurance, your heirs won’t have to liquidate assets to pay the taxes on your estate.
Reason #5: Make a large charitable contribution. Here again, the leverage of life insurance comes in. If you choose a charity as the beneficiary of your policy, you can leave them a much larger contribution than the amount you pay in premiums.
Reason #6: Savings. Permanent life insurance builds up a cash value, which you can access, tax free, by taking a loan on the policy. Plus, the interest credited to the policy as it grows is tax deferred.
6 key reasons to act today. And what do you think? Who is your life insurance really for?
Since life insurance is something many of us put off for another day, let’s think about reasons why we should act now. And ask yourself, how much is it about me?
Reason #1: to pay for final expenses. Even if you are single, your passing will put a burden on others if you don’t have any life insurance. Do you know how expensive those costs can be now?
Reason #2: to replace your income. If you have a spouse, and especially if you have children too, your life insurance can take care of them for some time after you pass on.
Reason #3: Create an inheritance. Even if this is your only asset you leave, life insurance is a leveraged way to leave an inheritance tax-free to whoever you name as beneficiaries.
Reason #4: Pay your estate (“death”) taxes. By paying these taxes with insurance, your heirs won’t have to liquidate assets to pay the taxes on your estate.
Reason #5: Make a large charitable contribution. Here again, the leverage of life insurance comes in. If you choose a charity as the beneficiary of your policy, you can leave them a much larger contribution than the amount you pay in premiums.
Reason #6: Savings. Permanent life insurance builds up a cash value, which you can access, tax free, by taking a loan on the policy. Plus, the interest credited to the policy as it grows is tax deferred.
6 key reasons to act today. And what do you think? Who is your life insurance really for?
Wednesday, July 29, 2009
Clear Vision, Decisive Action
When is a good time to provide for your future?
When I got out of college, I wanted to see the world. My friends were on the fast track to become lawyers and doctors and teachers, and they advised me that if I followed my dream, I would get behind. Well, I went, telling them that I would take my retirement then, and if I was behind I would just have to work in my later years when they were all retired.
You know what? I was behind them, and am still working to catch up. But I wouldn't exchange my two-and-a-half years living in Hawaii, Asia, Australia, and the Middle East for anything. I grew up, and gained a global perspective. I made friends I connect with to this day. I am grateful for that early retirement.
And who knows which of us will enjoy a full retirement? One of my classmates got on a cross-country flight out of Boston on 9/11, and we never were able to see him again. Others have contracted serious diseases, even in their 30's.
Adolescents typically think that they are invincible, and take risks. It is in their wiring, and they cannot help it. But after about age 20, when our brains have finished growing, we realize full well that we are not invincible. And if we're smart, we begin to take steps to prepare for our future; we calculate the risks; we take responsibility for the little ones in our lives who now depend on us.
Why do sensible people still procrastinate and put off taking action? In the back of our minds, we know we should take action to provide for tomorrow. But we think tomorrow will never come, and that is where surprises and even tragedies can occur.
You can be smart and take action before tomorrow comes. Think about your future needs and those of your family, take steps with an insurance professional to plan for them, and then enjoy your present moments with the ones you love. You may not be able to predict exactly what the future will bring, but you'll have the peace of mind of knowing, come what may, you provided for your family.
When I got out of college, I wanted to see the world. My friends were on the fast track to become lawyers and doctors and teachers, and they advised me that if I followed my dream, I would get behind. Well, I went, telling them that I would take my retirement then, and if I was behind I would just have to work in my later years when they were all retired.
You know what? I was behind them, and am still working to catch up. But I wouldn't exchange my two-and-a-half years living in Hawaii, Asia, Australia, and the Middle East for anything. I grew up, and gained a global perspective. I made friends I connect with to this day. I am grateful for that early retirement.
And who knows which of us will enjoy a full retirement? One of my classmates got on a cross-country flight out of Boston on 9/11, and we never were able to see him again. Others have contracted serious diseases, even in their 30's.
Adolescents typically think that they are invincible, and take risks. It is in their wiring, and they cannot help it. But after about age 20, when our brains have finished growing, we realize full well that we are not invincible. And if we're smart, we begin to take steps to prepare for our future; we calculate the risks; we take responsibility for the little ones in our lives who now depend on us.
Why do sensible people still procrastinate and put off taking action? In the back of our minds, we know we should take action to provide for tomorrow. But we think tomorrow will never come, and that is where surprises and even tragedies can occur.
You can be smart and take action before tomorrow comes. Think about your future needs and those of your family, take steps with an insurance professional to plan for them, and then enjoy your present moments with the ones you love. You may not be able to predict exactly what the future will bring, but you'll have the peace of mind of knowing, come what may, you provided for your family.
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