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WHY YOU SHOULD CONSIDER LONG TERM CARE INSURANCE

By Nancy Hughes Coe, As featured in At Home Tennessee, August 2007 Issue

"No one wants to labor a lifetime to accumulate assets only to see them depleted by health care expenses. "

THE MAJORITY OF US WILL REQUIRE ASSISTANCE WITH health and personal needs as we age. Long term care, whether provided at home or in a nursing home, can be very expensive. The average cost of one year in a nursing home is nearly $74,000; round-the-clock home care can be much more.

Unfortunately, many people are not prepared for these expenses, partly due to increasing life expectancies. Half of couples age 65 and over can expect one spouse to live past 90. And living longer does not always mean living healthy. When you cannot perform two of the six Activities of Daily Living (bathing, eating, dressing, toileting, continence, transferring), long term care insurance can provide for paid assistance.

Neither the government nor your health insurance will cover your long term care needs. Medicare provides little, if any custodial care. Medicaid, which is a government welfare program, will not provide long-term care for you until you have impoverished yourself down to $2,000 worth of assets.

Furthermore, Medicaid no longer excludes the value of your personal Residence from your net worth. In addition, it will “look back” five years for possible asset-shifting among relatives.

In addition, we are a generation that overspends and under-saves. Many people do not invest enough for retirement, much less plan how to protect those assets from being consumed by long term care needs.

No one wants to labor a lifetime to accumulate assets only to see them depleted by health care expenses. Whether you want to preserve your estate for your heirs or simply have enough to pay these expenses without exhausting your assets, you should consider long term care insurance.

"We insure our homes against the slight risk of losing them in a fire, and our autos against the somewhat higher risk of damaging them in an accident. These risks pale beside the magnitude of risk of needing care as we age, which is greater than 1 in 3," according to one major insurer. "Unless you have made provision for long-term care, your financial program could be thrown into chaos by large, unanticipated costs."

If life insurance is your protection against dying too soon, then long term care insurance is your protection against living too long.

What should you look for in a policy?

• Be sure the policy covers in-home care; most of us would prefer to stay in the comfort of our own home. For every person in a nursing home. there are four more being cared for in their homes. In-home care may include home health aides and personal care attendants for help with hygiene, dressing, and managing medications. Homemaker services may be available for help with meal preparation, laundry, and light house cleaning.

• Adult day care programs are usually covered, as is hospice care in the event of terminal illness where special care at home or in a facility is required.

• Substantial discounts may be available for shared policies that couples buy together.

• Check: the policy to determine if care providers can be independent, rather than affiliated with a home care agency. That way, even friends and neighbors may be able to provide unskilled services.

• Be sure that assisted care facilities for Alzheimer's are not excluded, and that you can have private duty nursing care in a nursing home if desired.

• A good policy will have built-in inflation protection, providing annual benefit increases. Once coverage begins, some policies waive premiums.

You must select several required options:

• What do you want the monthly benefit to be? Most people choose between $3,000 and $5,000. In a good policy, the amount you do not use one month stays in the pool of available funds, thereby extending the life of the policy.

• For how many years do you want coverage? The average stay in a nursing home is 2.5 years and home health care is longer. Therefore,  many people choose 5 to 7 years.

• How long will your elimination period be before benefits kick in? All policies have an elimination period----the amount of time you must pay expenses yourself before your coverage begins (e.g., 30, 90 or 180 days). which is like a deductable. The longer the elimination period, then the lower the premium will be.

Considering long term care needs requires us to look far ahead. Since premiums are based on age, the younger you are, the less expensive the premiums will be. They are also tlat-one major company, for example, has not increased its premiums in 30 years! A good:finaw::ial advisor can help you select the coverage you need. Long term care insurance provides a :finaw::ial safety net to help preserve financial independence, choice, and dignity in advance of any unforeseen circumstances or crises. It can be a thoughtful way to protect rather than strain family relationships when the time comes for you to need care.

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