I received an email from a friend and client of mine a couple of weeks ago. She’s a single executive in her 40’s at a company in Dallas and she wanted to meet for coffee to discuss long term care insurance. Her email contained an amount of coverage she wants to have, so I gathered the information I needed to construct a quote to help guide our discussion.
It’s obvious she’s done some thinking and research on this for herself which is very important. I also believe we take the time to discuss what’s led her to make the decision to research and seek long term care insurance, as well as how she arrived at the amount of coverage she stated in her email. It’s important for me to completely understand her goals, decision making process, and how she wants that period of her like to be for herself instead of just selling her a policy.
When I discuss long term care insurance with anyone, I want to confirm we’re working from a common understanding of long term care insurance. It’s important they understand:
- What is long term care insurance
- The type of care it provides
- Why it’s important
Long term care insurance, or LTC, is designed to protect the financial assets of an individual by covering some or all of the cost of care when they’re not able to fully care for themselves. At this point in life, a person may need help with one or more of the activities of daily living (ADL’s) including bathing, eating, dressing, toileting, continence, and transferring. In addition to the activities of daily living, LTC may include help with home health care, respite care, hospice care, or adult day care.
Long term care coverage may provide for care to be given in a variety of settings such as a nursing home, an assisted living facility, a person’s home, or a hospice facility. Some policies may also cover care management services to help evaluate a person’s needs while coordinating and monitoring their long term care services. The level of care provided is determined by what the policy covers and the needs of the individual.
The reason long term care is important, is the cost for personal care and where it’s provided have risen dramatically as the population of baby boomers entering retirement has exploded.
- Nursing home cost: In 2010 the national average cost was $78,000 a year for a semi-private room. This cost increases as therapies and medications are added.
- Assisted living facilities: The national average for a one bedroom unit in an assisted living facility in 2010 was $3,293 a month or $39,516 a year. This price included rent and most other fees but does not include additional cost if ore care is required.
- Home health care cost: The national average for basic home health care average $21 an hour in 2010. Skilled care from a nurse, physical therapist, or rehabilitation therapist is even more expensive. Annual cost varied widely depending on the level of care and amount of time needed to administer that care.
Most of these costs are being covered by individuals and families which is why people are beginning to examine this coverage for themselves and for aging parents. It’s very difficult to determine what anyone will pay for LTC insurance as the premium is based on a variety of factors such as age, health, the level of care one desires and/or requires, and the length of time the policy needs to lasts.
Do you have long term care insurance? Share why or why not, as well as your thoughts, comments, experiences, and questions with me in the comments section of our blog or on our Google + and Facebook pages. I’d love to hear from you!