Have you ever thought about how much it would cost your family if you or your spouse needed to pay the daunting cost of a long-term illness? Consider the following:
- The likelihood that you will have a fire in your home this year is 0.3%.
- The likelihood that you will be in an automobile accident this year is 1.9%.
- If you are age 65 or older, the US Department of Health and Human Services Administration on Aging estimates that you have a 70% chance you will need some form of long-term care sometime in your life. Twice as many women as men will need to plan for a long-term illness.
This issue becomes even more important for those individuals who are well off. Many families with very high net worth will self-insure this risk. Individuals with low net-worth may rely on Medicaid for long-term care expenses. For those families in the middle to high net worth categories, they must weigh the cost of buying long-term care policies with the benefits they offer. Do they self-insure and hope they are part of the 30% who won't need long term care? Or, do they buy a long-term care policy with the knowledge that premiums might rise over time?
Whether you buy or don't buy a policy, we believe you should plan for the probability that you will need some level of long-term care down the line. Here are some things to consider:
- Who will be your primary caregiver? According to Versta Research, twice as many people worry more about becoming a burden on their relatives than they do about depleting their savings. If you need care, who will ultimately be responsible for your care?
- Who will make health care and legal decisions for you? Have you talked with these people about your wishes? Most of this can be accomplished through health care powers of attorney and durable powers of attorney. You should tell your doctors who your caregiver will be, and provide your future caregiver with your doctor's information.
- How will you pay for long-term care? Let your family and caregivers know your plans, and be sure you ask someone to pay your bills. If you have a long-term care policy, make sure your loved ones have contact information for the broker who sold you the policy, as well as the insurance company.
If you would like us to help you think through this important issue, please contact us. This may seem to be a small part of your financial life, but it may end up being the most important part of your plan.