When should I consider Long-Term Care Insurance? 

 

By Jon Flynn

 

When I was a kid, I remember tagging along with my mom on a trip to Carbondale from my home on Finch Hill.  Perhaps we were going grocery shopping at the “Big Chief” or maybe she was taking me to a dental checkup at “Dr. Salko’s” office.  Whatever the destination, I remember the AM radio in our little red Datsun was playing a popular 50’s song that most of you probably remember dearly.  It was one of my mom’s favorite songs, “If I Knew You Were Comin' I'd've Baked a Cake”.  As a Financial Planner that song always resonated with me because my job is essentially helping people to grow and protect their money and the title of that song perfectly sums up the need for being prepared.  

 

When it comes to protecting your money one of the most important items in my toolbox is – Long-Term Care insurance.  I’m sure many of you have kicked around the idea of getting Long-Term Care insurance at one time or another. Here’s a quick guide to determine whether or not Long-Term Care (LTC) insurance may be right for you.

Long-Term Care insurance probably isn’t right for you when:

-          The premiums would be too much to fit into your budget now and in the future, especially if your premiums where to unexpectedly rise by 20 – 30%.

-          You have very little savings and equity in your home due to A) the inability to save money over your working years or B) due to proper estate planning which removed the bulk of your assets from your estate.  If a small amount of assets are at risk, then the LTC premiums probably aren’t worth paying.

-          Your income is made up primarily of social security income and not interest and dividends and/or you are already on Medicaid. If this is the case, chances are you’ll probably qualify for Medicaid anyway thus eliminating the need for LTC insurance.

Long-Term Care insurance may be right for you when: 

-          You have quite a bit saved up in items like savings accounts, cd’s, Ira’s, brokerage accounts, home equity, secondary properties, ect., then you have much at stake. An extended stay in a nursing home can be devastating to you savings. 

-          You have plenty of room in the budget to afford the cost of hefty premiums.  Long-Term care insurance can be expensive.  But at the same time, it’s a great tool for protecting your savings.

-          You want control over things like, A) the type of care, B) where you’ll receive the care, C) your independence.

-          It’s important that you protect your assets for your children.  Perhaps you have a child that has special needs or is dependent on you.  If this is the case they can really be harmed by not having your assets left to them when you pass away.

Insurance is about planning for the unexpected things that can happen to us in life – like an extended stay in a nursing home. So remember, have that “cake” ready.

 

Everybody’s situation is different and arriving at solutions can get complicated.  Please be sure to always consult with financial, legal, and tax professionals before making any decisions.

 

 

Jon Flynn is a Certified Financial Planner ^TM and owner of Flynn Financial in Eynon. He is a Representative of Securities America, Inc., Member FINRA/SIPC and of Securities America Advisors, Inc. Flynn Financial and Securities America are unaffiliated.   Mr. Flynn can be reached at 570-876-5015.