Greetings, Dear Friends and Clients,
Why Self-Insuring for LTC Might be Unwise...
Long-term care insurance (LTCi) preserves wealth; this is a fact. But in my mind, wealth preservation is the secondary, not the primary reason any well-informed person purchases LTCi.
The primary reason is emotional. The fact that LTCi does such a great job of preserving wealth is icing on the cake.
My clients are astute, well-informed, educated people making a complex buying decision when they apply for LTCi. It is generally 20 or more years after they've purchased it that people need to collect from their LTCi.
When clients describe to me their instability and fall risk stepping out of the shower, plus their difficulty getting dressed without the help of a spouse, I know immediately that they are entitled to collect from their LTCi. But clients often insist that they really don't need help.
At the point of decline, after a long life of good health and independence, it must be extremely scary and/or depressing to acknowledge the need for assistance from other people. The only explanation I can come up with for this refusal to get much needed long-term care (which will pretty much be paid for by their LTCi) must be emotional factors that are interfering with sound, rational judgment.
Many middle- to very high-net worth individuals would rather suffer (often causing undue stress and unnecessary hardship for their spouse and children) than spend their own money paying for long-term care. Here's a blog I just wrote on high net worth families.
The following is a true story, not a paid endorsement:
"Dear Honey - Mom bought her long-term care insurance (LTCi) policy in 1999. She paid in approximately $14,700 before her premiums stopped when she began to collect from her policy in 2006. That's when she was diagnosed with cancer. Her doctors told her she'd live for three more years. Instead, she lived for 9 more years. I really think owning LTCi played a role in her increased lifespan.
Mom was a self-made woman and had the money to pay for her own care, but she would have refused to spend her money on it! If she had not had LTCi, managing her care would have been so much more difficult for all of us. I know that my relationship with my mother and brothers would have been far more stressful. As it were, Mom declined to utilize her LTCi benefits fully for a number of years, before her failing health mandated more care.
My mom and I were close, and I visited her often. I am grateful that the caregivers made it unnecessary for me to have to help my mom with intimate tasks, such as bathing and toilet assistance. Because of LTCi, we were able to maintain our mother-daughter relationship. In addition, since mom had devoted and competent caregivers, I did not feel my brothers and I had to be physically present all the time in order for Mom to remain safe in her home and to get the quality care she required over her lengthy illness.
We are grateful to our mother for having the foresight to purchase LTCi that helped all of us over the 9 years Mom was ill, not only financially but emotionally. We each have heard from others who are navigating their parents' senior years without having LTCi available as their health declines. How fortunate for the four of us that Mom took care of this very important issue a long time ago, of course not knowing she would be a recipient of the coverage in less than 7 years. Our conservative estimate from incomplete records indicate that Mom collected at least $142,000 from her LTCi policy." ~ EQ, Houston, Texas, March 2015
There are high odds that many of us will need care. LTCi ownership is first about making sure you continue to have the dignity, options, safety, security and choices you're accustomed to until the last day of your life. The fact that LTCi preserves your wealth is a wonderful bonus.
Please feel free to pass this along to friends and family. If I can help, at no obligation, please call, email, or visit www.honeyleveen.com.