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Long-Term Care

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Separating Long Term Care Insurance Myths from Realities
By Kenneth Schulman, CLTC

(Page 3 of 4)

The impact of long-term illnesses and the stresses they place on families is difficult to measure in the workplace, but studies in recent years have also shown that U.S. employers lose significant dollars in productivity each year in tardiness, absenteeism and “presenteeism,” when employees show up for work but are too distracted by the responsibilities and issues of caring for a sick family member to perform well.

Overcoming the Myths

A large part of my role when meeting with families is to help them understand the important role families and long-term care insurance can play in a parent or loved one’s future. For every truth associated with long-term care insurance, there are 10 myths. Here are some of the top myths that should be addressed in long-term care planning:

Most people can pay for their own care

Many people think they can liquidate taxable or tax-deferred assets, including retirement plans or annuities, to pay for long-term care costs. The buzz surrounding reverse mortgages has also given momentum to the concept of paying for care instead of having a policy. As with all financial decisions, you should first consult a trusted financial professional and a tax advisor to determine the tax implications and the recommended sequence for liquidation before doing so.

Long-term care insurance is only for nursing home care 

When most people think of long-term care, they think of nursing homes. However, over 80 percent of persons receiving long-term care are in home- and community-based settings, not in nursing homes, according to “Long-Term Care: An Overview.” (Testimony before Senate Committee on Finance, March 27, 2001, statement of Carol O’Shaughnessy, Specialist in Social Legislation, Congressional Research Service.)

All long-term care insurance is the same

Actually, many policies offer various options, and all policies are not created equally.  When making a direct comparison from one policy to another, keep in mind that five key elements of any policy contribute to price and quality: the financial strength of the company underwriting the policy, the daily benefit, benefit period, deductible, and inflation protection:

  • Financial Strength Ratings:  Be sure to weigh the reputation and financial strength of a company in the decision-making process, so families have a sense of confidence, as high ratings are an indication that the insurance company will be able to pay any future claims against the obligations they have outstanding.
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