It's an Ideal Time to Discuss Long-Term Care Planning

Current timing is good to discuss long-term care planning with clients due volatility, visibility and vulnerability.

Volatility

This year has had its ups and downs including the stock market. This also illustrates the importance of how a separate, dedicated stream of dollars to pay for an added expense like long-term care provides stability to one’s financial situation. A long-term care insurance policy provides a pool of funds to help pay for care. No worries about a changing portfolio allocation at the right time or the risking funds you may have had earmarked for a future extended care event.

For those who preferred a safer savings vehicle as part of their plan, the low interest environment has become dismal for producing extra income for an emergency fund. While cash is king with CD’s, money market, and savings accounts, a long-term care policy can produce leverage that may now be more attractive than it was prior.

What about the talk of inflation? From 2004-2019, facility and in-home care services have increased 1.71% – 3.64% per year.[1] It’s hard to say what the future will hold, but there is an argument that there will be at least some in the near term overall and the trend is likely to continue for caregiving facilities and services. Does your long-term care plan factor this in?

Visibility

Unfortunately, in the last several months caregiving facilities, particularly nursing homes, have been in the news the last several months for the worst reasons because of the pandemic. At the same time it does raise attention and make individuals think about where they would want to receive care. Nursing homes are often thought of, but are not the only option. 

Further the entertainment industry has also been weaving caregiving into scripts. This is a topic that so many families are dealing with and can relate to. For example in Grace and Frankie (Netflix) there is a constant theme underlying throughout the show with younger family members discussing with the main characters whether it’s time to move to an assisted living facility due to physical and mental declines that are blamed on unfortunate mischievous behavior. And in the show Zoey’s Extraordinary Playlist (NBC), Zoey’s has an ailing father who has been receiving home care impacting her emotionally while she is also trying to juggle her career at a start-up technology company.

In these two examples and for the majority of individuals the preference is to “age in place” at home, but many consumers still may not realize that long-term care insurance covers home care and other facilities and services beyond nursing homes.

Vulnerability

There has been a lot of concern this year, but people are coming together and providing support in new ways. We’re inviting our teachers, doctors, co-workers, clients, and friends into our homes like we never have before through video calls. We’ve been reminded how quick things can change, how important our health is, and that planning ahead before emergencies is prudent. This creates an ideal environment to have a dialogue with clients as they think about the financial protections in place to help maintain their lifestyle and reach their goals.

Whether insurance is chosen as part of a protection plan for a long-term care situation or not, it is important to begin having a conversation and creating and documenting the intended plan.

[1] Geworth Cost of Care Trends (2004 – 2019), https://www.genworth.com/aging-and-you/finances/cost-of-care/cost-of-care-trends-and-insights.html