Be Prepared For Long-Term Care

Congratulations, baby boomers; up to 3 million of the 76 million of you will celebrate your 100th birthday.

Today's centenarians have become the poster children for what scientists call the "longevity revolution," which has added more than 30 years to life expectancy in the past 100 years.
How well you live during those extra years will depend on how well you've planned for the ordinary cost of living longer and the extraordinary cost if you need long-term care.

We all know the value of buying life insurance — it's there for a rainy day or to protect the people we love from the financial impact of a premature death. Yet, how well have you protected those same people in the event that you don't die? How well have you protected your retirement income, and the emotional and logistical burden of caring for you in the event that you are no longer able to care for yourself due to physical limitations or some form of dementia?

Americans are in denial about the oncoming crises in the costs of care. A recent poll indicated that 59 percent of baby boomers are concerned about the growing cost of care, yet 72 percent have made no plans, maybe because we believe that Medicare or Medi-Cal will pay. Think again. Maybe Medi-Cal will, if you've become financially impoverished and want to stay at a Medi-Cal-funded nursing home. If you want to maintain your choices and stay out of a nursing home, your only options are to spend your own assets or buy long-term care insurance.

According to results of Genworth Financial's "2007 Cost of Care Survey," the average national cost of care in nursing homes, assisted-living facilities and home-based care has increased 15 percent since 2004. The survey said the average daily rate of private nursing home care is $204. The cost of assisted living can be close to the same, and even a home healthcare provider averages $19 an hour. As the costs grow an average of 5 percent a year, will you be able to shoulder these expenses on your own?

Although the majority of people who require long-term care are over the age of 65, 40 percent are between the ages of 18-64, so don't think that you're "too young" to be in care. When considering the purchase of long-term care insurance, understand that you will need to meet medical qualifications, and even a bad diagnoses can make coverage unavailable. Although once you've been approved for a policy, it is "guaranteed renewable," and no changes in your health can affect your coverage. Waiting too long may mean losing your "insurability" due to pre-existing health conditions. Because the premiums are based on your current age, waiting may also mean paying higher premiums. Other factors in determining premiums are health, marital status and the amount of coverage you purchase.

The product is not suitable for everyone. If you have to make substantial changes in your lifestyle to pay your premiums, it isn't for you. Like any insurance product, it is for those who have something to protect and something to lose. The product is suitable for anyone who wants to avoid an unintended invasion of their portfolio and those who want to maintain their independence, their choices and help their kids fulfill their promise that they'll never put you in a nursing home.

This isn't a do-it-yourself product. Meet with a long-term care insurance specialist so they can pick the most appropriate plan at an affordable premium.