Long-term care has been a popular topic in the financial advising and insurance worlds for some time now, however, not all financial advisors are familiar with how the need for long-term care can affect a family’s finances.
Often, the financial effects are felt not only by the senior who needs care, but by their adult children, as well. People who are in long-term care for months or even years may end up wiping out their retirement funds and needing help from their children, which can have a negative effect on their family.
In order to help their clients prepare for this potential need, here are 3 facts about long-term care that every financial advisor should know.
Discussing long-term care is in the best interest of your clients
As a financial advisor, it is important that you disclose all available options to your clients.
Increased life expectancy, combined with advances in medicine, have made it more likely that adults will need long-term care at some point, and for a longer time period than before. According to the Department of Health and Human Services, the chances that people turning 65 today will need some type of long-term care are about 70%.
However, that care will cost (on average) about $140,000 total. Not planning adequately for that kind of expenditure can be catastrophic for a family.
Regardless the avenue the client chooses to pay for care, whether long-term care insurance, a life settlement, or self-funding, it is important that all available options are provided so they can make the most informed decision.
There are different kinds of long-term care, with different purposes.
Not all long-term care involves nursing facilities with around-the-clock care.
Clients who are injured due to a fall or a medical event, for example, may need rehabilitative care. This could be inpatient or outpatient, and for a matter of weeks or months.
Clients who are experiencing dementia or severe physical incapacitation may need more extensive care, at an assisted living, memory care, or nursing facility.
Then there are services like Hospice, which are aimed at helping people achieve a comfortable, dignified death.
Each type of long-term care has separate insurance products that are associated with it, as well as different costs and outlooks. Knowing about these differences will help you provide the best guidance possible to your clients.
Life settlements are an often-overlooked solution for funding long-term care.
Some of the life settlements we facilitate at Ashar are done for the purpose of funding long-term care. Yet many seniors - and even advisors - aren’t aware of this option.
A life settlement can offer families a lump sum of cash that’s greater than the cash value of a life insurance policy. For seniors with policies they no longer need, or policies that have become too expensive, this can be a highly beneficial option for funding long-term care and other retirement needs.
The proceeds from the life settlement can be used however the recipient likes, but many put the funds into an account that makes payments directly to the long-term care facility. This can take a huge amount of stress off a family, allowing them to focus on what’s really important: enjoying the time they have together.
Long-term care is an important topic today when it comes to retirement planning. For more, read our post “Why You Need to Discuss Long-Term Care Planning with Your Clients.”