It seems that everywhere we turn today we hear more and more about long-term care and long-term care insurance. It has been a regular topic of magazine and newspaper articles, and a recent topic of discussion throughout health care and financial circles. Why are so many members of the media, the government and other groups discussing long-term care? There are a variety of reasons:
The Rising Cost of Long-Term Care
Despite the fact that the average annual cost of long-term care in the US does vary widely from region to region and state to state, the rising cost of long-term care services is a big reason long-term care insurance has been a widespread topic of discussion of late.
The current average annual cost of long-term care in the United States is about $55,000 per year.1 Obviously, even for people who have taken care to manage their finances and planned diligently for their retirement, paying today’s long-term care costs out of pocket can be a financial strain.
The current, as well as the projected costs of a protracted long-term care event, probably come as a surprise to many people and this results in a heightened level of public interest in the issue. Consequently, as people look to find ways to help protect themselves from the high costs of any potential long-term care event, they are also seeking more information about private long-term care insurance.
The Aging of America
Another reason that there is a heightened awareness about long-term care insurance today is the existence of a growing group of Americans who are preparing to retire at a time when life expectancy rates are rising dramatically. The United States is preparing to see a huge group of people join the ranks of the retired, creating a potentially dramatic increase in the need for long-term care services in coming decades.
By 2030, when the last of the baby-boomers reach age 65, the number of severely impaired elders at risk of institutional long-term care could almost double to $6 million.2 Further, forty percent of people living to age 65 are projected to live to be 90 by the middle of this century, compared to 25% in 1980.3 The rising cost of care, combined with an increasing pool of seniors who are living longer, means that long-term care will continue to be a potentially major personal cost as we move further into this century.
Financial Planning and Long-Term Care Insurance
As people learn more and more about the high-cost of long-term care and the potential benefits of insuring against it, the role of long-term care insurance in people’s lives is shifting. Many people are beginning to consider long-term care insurance as a financial planning tool as much as they do an insurance policy.
There are plenty of individuals who have carefully managed their estates and planned for their retirement without having considered the impact an extended period of long-term care could have on those plans. As people gain an understanding of the costs of long-term care and gain an understanding of the potential benefits of long-term care insurance, the policy is moving from the file cabinet to the financial portfolio.
A number of financial advisors are now making long-term care insurance a core element of their retirement planning recommendations. Much like a life insurance policy, or a trust fund, long-term care insurance is becoming simply another way to help protect assets and help reach retirement and estate goals.
New Types of Care
Another driver that has increased people’s interest in long-term care insurance stems from public interest in the new types of care the long-term care industry is making available. There was a time when long-term care simply meant a stay in a nursing home. Today, however, long-term care services can sometimes be delivered in the comfort of one’s own home or in assisted living facilities that offer all of the comforts of home, but with on-site nurses and lifestyle amenities.
Today’s retirees want to maintain control over their lives, their health and their care needs as long as possible. As people hear about some of the new ways that long-term care is being provided they begin to inquire about long-term care insurance as a way to help ensure that the maximum amount of care options will be available to them if and when they need long-term care.
For more information about Long Term Care Insurance, contact me.
1 Scanlon, William J. United States General Accounting Office. Long-term Care Insurance. Better Information Critical to Prospective Purchasers. September 13th, 2000. Page 2.
2American Council of Life Insurers. Can Aging Baby Boomers Avoid The Nursing Home? March 2000. Page 7.
3 American Council of Life Insurers. Can Aging Baby Boomers Avoid The Nursing Home? March 2000. Page 13.
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