YO U R F IN A N C E S
GO LONG AND STRONG
If you’re buying long-term care insurance, it’s
vital to make sure you're putting your money
with a company that will be around in 30 or
40 years. Until they perfect the crystal ball,
the best way to make sure you're covered is
to stick with insurance companies that have
a high financial strength rating. You can
check ratings for individual companies
through such resources as A.M. Best
(.
am best.com
), Moody’s (
m oodys.com
) or
Standard & Poor’s
(standardandpoors.com ).
F o r th e s e re a s o n s , m o s t fin a n c ia l e x p e r ts
I s p o k e w ith a g re e d t h a t in g e n e r a l y o u
s h o u ld s t a r t lo o k in g i n t o a p o lic y w h e n
y o u t u r n 5 0 . “ M a n y o f th e d r e a d e d d is e a s e s ,
lik e P a rk in s o n ’s a n d A lz h e im e r’s, u s u a lly
s h o w u p a f te r a g e 50,” sa y s D ris c o ll. T h e
a v e ra g e a g e fo r a firs t p o lic y is 5 8 —a g o o d g o al
to s e t fo r m o s t p e o p le . O f c o u rs e , if y o u h a v e a
fa m ily h is to ry o f A lz h e im e r’s o r a n o th e r
c h ro n ic c o n d itio n , y o u m a y o p t to b u y a p o lic y
w h e n y o u a re y o u n g e r. I f y o u w a it u n til y o u ’re
in y o u r 7 0 s to b u y a p o licy , y o u m a y n o t e v e n
q u a lify . R o u g h ly h a lf o f p o lic y a p p lic a n ts a re
d e n ie d c o v e ra g e in th e ir 7 0 s a n d 8 0 s fo r
h e a lth re a s o n s , a c c o rd in g to M illim a n .
PLAN FOR WHAT YOU NEED
N u rs in g h o m e c a re r u n s a n a v e ra g e o f $213 a
d a y o r $77,745 a y e ar, a c c o r d in g to M e tL ife ’s
M a tu r e M a rk e t In s titu te . A n a s s is te d -liv in g
fa c ility w ill s e t y o u b a c k $ 2 ,9 6 9 a m o n th
o n a v e ra g e a n d $ 4 ,2 7 0 fo r p e o p le w ith
A lz h e im e r’s o r o th e r fo rm s o f d e m e n tia . I f
y o u a s s u m e a 5 p e r c e n t ra te o f in fla tio n , in
2 0 y e a rs it w o u ld c o s t $ 5 6 5 a d a y fo r n u r s in g
h o m e c a re o r a b o u t $ 2 0 0 ,0 0 0 a y e a r. I f y o u
h a v e m o re th a n $1 m illio n in a s s e ts to d a y , y o u
c o u ld o p t to s e lf-in s u re . B u t fo r m o s t p e o p le ,
th e s e s u m s c o u ld d e c im a te th e ir life sa v in g s
very
q u ic k ly . T h a t ’s w h y fin a n c ia l p la n n e r
D e e n a K a tz s tro n g ly re c o m m e n d s lo n g -te rm
c a re in s u ra n c e to h e r c lie n ts . “ I b e lie v e it is
o n e o f th e m o s t im p o r ta n t p la c e s y o u c a n p u t
y o u r m o n e y ,” s h e say s.
WHEN TO BUY
T h e p o lic ie s d o n ’t c o m e c h e a p . T h e a v e ra g e
p re m iu m is a b o u t $ 2 ,0 0 0 a y e ar, sa y s S h e lto n .
Y ou c a n s la s h th e c o s t d r a m a tic a lly if y o u b u y
a p o lic y w h e n y o u ’re y o u n g e r.
“E v e ry 10 y e a rs y o u w a it, th e p ric e
d o u b le s ,” s a y s M a rile e D ris c o ll, a u th o r o f
The Complete Idiot’s Guide to Long-Term Care
Planning.
B u t th e a v e ra g e a g e o f a p e rs o n
m a k in g a c la im is a r o u n d 80. W ill y o u b e a b le
to k e e p y o u r p o lic y in fo rc e all th o s e y e a rs if
y o u b u y w h e n y o u ’re m id d le -a g e d ? W h a t if
y o u r p re m iu m g o e s u p , a s th e y s o m e tim e s d o ?
Y ou m a y h a v e o th e r m o re p r e s s in g fin a n c ia l
c o m m itm e n ts w h e n y o u ’re y o u n g e r—s u c h as
p a y in g fo r c h ild r e n ’s c o lle g e c o sts.
SMART COVERAGE CUTS RATES
T h e n e x t q u e s tio n y o u s h o u ld a s k is h o w
m u c h c o v e ra g e y o u w a n t to b u y . T h e c o s t o f
c a re v a rie s w id e ly , d e p e n d in g w h e r e y o u live.
F o r in s ta n c e , in L o u is ia n a , th e a v e ra g e d a ily
r a te fo r n u r s in g h o m e c a re is $123, c o m p a r e d
to $5 1 0 in A la sk a . So, lo o k in to r a te s in y o u r
a re a a n d m a k e s u r e y o u b u y e n o u g h c o v e r -
a g e f o r c a r e w h e r e y o u p l a n t o liv e . Y ou c a n
r e d u c e th e c o s t o f y o u r p re m iu m b y o p tin g fo r
a lo n g e r “e lim in a tio n ” p e r io d —th o s e w e e k s
b e fo re th e in s u r a n c e k ic k s in w h e n y o u p a y
th e b ills y o u rs e lf. M o s t p o lic ie s h a v e a t le a s t a
3 0 -d a y e lim in a tio n p e rio d , b u t if y o u c a n se lf-
in s u r e fo r 9 0 d a y s, y o u ’ll sa v e m o n e y .
A n o th e r w a y to c u t c o s ts is to b u y w h a t
e x p e r t s c a ll a “ s h o r t , f a t p o lic y ” —t h a t is, g e t
g o o d c o v e ra g e fo r a s h o r te r tim e p e rio d
r a th e r th a n le a n c o v e ra g e fo r a life tim e . I t ’s
u n lik e ly th a t y o u w ill n e e d c a re fo r m o re th a n
a fe w y e a rs . In fa c t, o n ly 10 p e r c e n t o f
c la im a n ts n e e d lo n g -te rm c a re fo r m o re th a n
five y e a rs , a c c o rd in g to 2 0 -y e a r s tu d y b y th e
S o c ie ty o f A c tu a rie s . So, y o u ’d b e fa r b e tte r o ff
w ith a $ 2 0 0 d a ily b e n e f it fo r th r e e y e a rs th a n
a $ 1 0 0 b e n e fit fo r a life tim e . Y ou c a n a lso sav e
a b u n d le —fro m 10 p e r c e n t to 3 0 p e r c e n t—if
y o u a n d y o u r s p o u s e b u y p o lic ie s to g e th e r.
A n d finally, d o n ’t s k im p o n i n f l a t i o n
p r o t e c t i o n . Y ou m a y s p e n d 4 0 % m o re to g e t
a p o lic y w ith a d a ily b e n e f it th a t in c re a s e s
w ith in fla tio n , b u t i t ’s w e ll w o r th th e e x tra
m o n e y . A s K a tz say s, “T h e d o lla rs y o u s p e n d
to d a y a r e n ’t g o in g to b u y a to n g u e d e p r e s s o r
in 2 0 y e a rs .”
LONG-TERM
OPTIONS
■ Partnership
plans These plans
protect some or all
of your assets from
being depleted
before you might be
eligible for Medicaid.
For every benefit
dollar you pay for, a
dollar of your assets
is protected. That
way if your private
coverage isn’t
enough, you can
turn to Medicaid
without spending
down your assets.
States that offer
these plans include
Arkansas, California,
Colorado,
Connecticut, Florida,
Georgia, Idaho,
Indiana, Iowa,
Minnesota, Missouri,
Nebraska, New
Jersey, Kansas, New
York, North Dakota,
Ohio, Oklahoma,
Oregon, South
Dakota, Tennessee,
and Virginia.
■ Hybrid plans
An example of a
hybrid is a life
insurance policy
combined with a
long-term care
benefit. If you don’t
use the long-term
care, the money rolls
over into your death
benefit. Long-term
care annuities are
similar. Starting in
20Ю,you will be able
to pull money out of
an annuity, tax-free,
to pay for long-term
care. No doubt many
consumers will end
up converting
regular annuities to
long-term-care
annuities due to this
tax benefit.
1 6 4 NOVEMBER 2008 BETTER HOMES AND GARDENS
