Long-Term Care
Making the Case for LTC Insurance
by Danielle Lemek
Advisors need to demonstrate why it's critical for clients to put money towards a long-term care (LTC) insurance plan. Many clients don't understand how their health affects the enrollment process. Younger people can get good health discounts. Their premiums are spaced out over a longer period. Many people don't realize that they may need coverage until they develop health problems. However, the ability to qualify for a good health discount diminishes with age. This discount could lower costs by 10% to 20% a year, according to a study by the American Association for Long-Term Care Insurance.
An older person on a fixed income may find it harder to afford this insurance, as it gets more expensive. More importantly, they may have a much harder time getting the benefits that would have been available at a younger age.
A private room in a nursing home costs $206 a day or an average of $75,190 a year. It costs an average of $19 an hour for a home healthcare aides, according to a study by the MetLife Mature Market Institute. These rates fluctuate depending on where you live, and they are projected to increase each year. Inflation protection is one of the most important aspects LTC insurance because policies pay out more when prices increase. The annual cost of long-term care will be more than $200,000 a year by 2030, according to the American Council of Life Insurance. Also, 80 million to 90 million Americans will be 65 or older, according to U.S Census estimates.
Many people aren't aware that federal programs will not support their long-term care needs. Things are likely to get worse as Baby Boomers age and programs such as Social Security, Medicaid, and Medicare are strapped for cash. The Deficit Reduction Act of 2005 will reduce Medicare and Medicaid spending. There will be higher premiums based on income. More regulation will tighten these programs, which means that fewer people will qualify for aid.
Twenty-eight percent of workers are not confident they will have enough money for medical expenses in retirement, according to studies by AARP and the Wall Street Journal. Let's look at the average person who retires at age 65 and does not have additional retiree health coverage. They will pay $200,000 to $300,000 out-of-pocket for medical costs that are not covered by Medicare. Statistics about rising long-term care costs can help clients realize the importance of LTC insurance.
Long-term care insurance would allow your clients to get qualified care and live out their future as they see fit without depending on family or friends.
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Danielle Lemek works for in the Public Relations Department at The American College in Byrn Mawr, Penn. She is a graduate of Temple University with a bachelor of arts Ddegree in strategic and organizational communications, concentrating in public relations. She can be reached at Danielle.Lemek@theamericancollege.edu. For more information about The American College, visit www.TheAmericanCollege.edu.
