The Wisdom of Having a Plan
The Wisdom of Having a Plan
By Natalie Karp and Rona Loshak
Wisdom: A wise outlook, plan, or course of action
Planning provides us with the wisdom of choice and freedom. As we reflect on 2012 and plan for 2013, we offer these conversation starters for discussing a long term care insurance plan.
Living a long life is likely in your future. Planning for it now is a necessity.
You may never get sick and need long term care, but the consequences to your family and retirement portfolio could be so catastrophic, the subject must at least be discussed.
The subject is not long-term care insurance – it’s long-term care.
The question is not who will take care of you when you live a long life and need care – it’s what providing that care will do to your family and your retirement portfolio
What would your plan be for extended care when medical insurance runs out?
Medicare, Medicare supplements and health insurance do not cover long term care. The time to plan is when you are “young and healthy”.
It a gift that we often don’t appreciate until health or age are compromised. Locking in age and health are critical to planning and opportunistic solutions.
- We are living longer healthier lives
- We have families we love and want to protect
- Planning provides the opportunity for independence and choice.
- Protecting your assets and income stream, and allowing your retirement portfolio to execute as intended is safeguarded with a long term care insurance plan.
- The case for insuring yourself is statistical and straightforward
What has happened to the delivery of care?
The paradigm is no longer the “nursing home care” that your grandparents experienced. Home and community care are the future.
State budget cuts, changes to Medicare and Medicaid are impacting health care access and services provided. Current and future gaps in government programs enhance the value of owning a long term care insurance policy that provides a pool of money for care. Today’s long term care insurance plans are customized, flexible and portable. Carriers offer plan benefits designed to meet the increased demands of the marketplace.
Redefine your thinking to allow for success
With long term care insurance plans there is also a new paradigm. Something is better than nothing. If shifting the entire risk is not affordable, consider co- insuring your future LTC costs with a “basic plan.”
FACTS OF LIFE
Rising premiums on next generation policies and fewer carriers
Longevity risk combined with the interest rate environment has resulted in rising premiums since 2003 and a consolidation in the marketplace. That is positive news. Carriers that have stopped selling policies have in fact, protected their existing policyholders by assuming no more risk. The remaining carriers create more solid competition and price plans appropriately so they can keep their commitments 20-30 + years from now.
The changing landscape of long term care insurance brings us more choices, solutions and opportunities
In addition to traditional long term care insurance and new State Partnership plans designs there are hybrid cash and linked benefits plans.
The linked benefit plans include universal life insurance contracts with long term care riders. Linking life insurance and long term care benefits provides a pool of money for long term care or a death benefit.
These plans may be appropriate for clients who want to pay a one-time premium, have a 1035 exchange opportunity, or have lingering concerns about paying a premium for a benefit they may not use.
Emotionally, this feels like reallocating funds that will remain a part of your asset portfolio (available if needed through return of premium) vs. “spending” money on a policy. Some think of it as “repositioning assets” to include life insurance if long-term care insurance is not needed. Note these solutions do not have the same tax advantages as traditional LTC or may not provide the same pool of money needed for the future.
Traditionally, these linked benefit plans have existed as universal life policies with an LTC rider. The next generation of policies (not yet available in NY, CA, CT) will use a whole life platform with a LTC rider.
Women and LTC
Okay ladies… the good news… we live longer… but we are claiming two thirds of the long term care benefits. Carriers have finally taken notice. Today policies enjoy unisex pricing; the next generation plans will price out higher for women.
State and federal incentives are encouraging us to take ownership of our long term care planning. For business owners and self-employed there are tax savings and deductions. States offer separate tax deductions or credits. Better than a “friends and family discount”, NYS gives a 20% tax credit on your premiums annually!
Make time to have the conversation. We wish you the wisdom of evaluating a long term care insurance plan to preserve your independence, financial security and your family’s wellbeing.