3. Local Conditions
When I purchased my long-term care insurance (LTCI) many years ago, I asked numerous facilities what the bills were at the highest — so I could be sure I could cover the cost. I also have 5% inflation on my benefit, which has just kept up with the increase in costs where I live over the past 20 years.
4. Coverage-Goals Mismatch
I do not want my clients to find that their cash flow between available income, yield on investments, and the LTCI that they buy to fall short causing them to use up assets or worse, spend down to Medicaid impoverishment.
I tell them about the median nursing home costs, per a survey, and also about the high costs that some people are paying, and let the clients choose the coverage level. If they want to plan for just the median cost, they initial an item showing that planning for just the median cost is their choice. If they want to be sure their insurance will cover the bills, just like auto insurance, they plan for the highest likely cost.
5. Variability in Variability
The concept of wide variations in costs applies to assisted living costs, and this gets even more complicated, since the amount of hands-on care provided is generally much less for assisted living care than for dementia care. Many sources tell me over half of facility care is for dementias, indicating a need for more cash flow.
There is a greater variation in price and quality of life at assisted living facilities than at nursing homes.
So, learn what expectations your clients have for care, and how certain they want to be that their cash flow plus insurance will cover what they expect before they choose amounts of LTCI coverage.
Romeo Raabe LUTCF, LTCP, has been an LTCI specialist in Wisconsin for 30 years..
(Featured Photo: Katarzyna Bialasiewicz/iStock)