Martin Bayne's Long Term Care Odyssey

October 17, 2012

Parsippany, NJ

There was Newton and his apple and gravity.  George Washington's apple tree and a young boy's honesty.  Every once in a while, one stumbles upon a story that illustrates a point.  Martin Bayne's story may well be the best modern tale to illustrate not just one, but several important points about long term care planning and insurance. 

Like many of his colleagues, insurance agent Bayne was younger than the average purchaser of long term care insurance (LTCI) when he bought his policy at 42.  Like most buyers, he was likely thinking about his old age, assuming he would put the policy aside for 40, or even 50 years before he needed it.  That all changed when he was diagnosed at age 45 with early-onset Parkinson's disease.  By age 51, he was collecting on his long term care insurance policy.

This experience illustrates the wisdom of purchasing LTCI before middle age.  Many insurance professionals purchase LTCI at younger ages, because they understand how the policies and pricing work.  They know that for every year one puts off the decision to purchase LTC insurance, the premium increases.  Purchase younger, and you will pay a lower premium for more years.  Purchase older, and you will pay a higher premium for fewer years.  The money equals out to about the same, no matter at what age you decide to buy.  So, why not wait? 

One important reason to not wait is that LTCI is medically underwritten, meaning you must be relatively healthy to buy a policy.  (A word of caution:  don't try to determine if you are healthy enough without consulting a specialist - the guidelines for LTCI are radically different from those concerning life insurance, for example.)  Since most of us don't become healthier as we age, it's smart to buy coverage at younger ages. 

Is there another reason why it's advisable not to wait?

Yes, there is another, and it's quite compelling.  It's also just plain common sense:  the need for long term care can strike people at any age.  In her book, "Awakening to Disability," author Karen Stone, who lived with multiple sclerosis until her death in 2008, categorized people as "disabled" and "temporarily able-bodied."  Writing about "the tenuousness of life," she cautioned the temporarily able- bodied about disability: "You could join that community this evening on your commute home. We can and should prepare for such an event."  Like Mr. Bayne, whose story was told above, the person who purchases a policy before age 50 to plan for old age may end up collecting a benefit decades earlier than he or she could possibly have foreseen.

While many of us will readily concede that accident or illness can occur at any age, we are reluctant to consider that the need for extended care can similarly strike.  At some level, we do know this rationally.  It's why we value health insurance and disability insurance;  evidently, we do realize that our health can be compromised.  

But let's not stop at a mere decline in health.  We are even aware that death sometimes holds court with an absolute disregard of age - or, why else would we purchase life insurance?  Clearly, we do acknowledge and plan for sickness and injury at any age.  And even death at any age... but not the need for extended care - which is frequently the bridge between the two.  Huh?  When it comes to LTCI, many of us have a blind spot.

Who are we to turn a blind eye to planning for long term care?