Long-Term Care Insurance: Reducing Your Loved Ones' Burden

When discussing Long-Term Care insurance with adults, it is not unusual to hear comments like, “I doubt I will ever be in nursing home,” or “no one in my family has ever needed Long-Term Care,” or even “if I ever come to that point, I will have someone in my family shoot me.” The variations on this theme are numerous, but the underlying message is clear. Few of us believe that bad things will happen to us; bad things only happen to the other guy. Human nature powerfully insulates us from seriously contemplating the reality that most of us will eventually become frail and unable to care for ourselves independently. Or that we might have a stroke, a disastrous accident, or be diagnosed with a chronic and dibilating disease. Statistical risk data seems to become irrelevant when it comes to our personal future.

By the same token, most of us do tend to care about the consequences that these unlikely events would have on our loved ones if they ever did occur. This explains why most of us purchase term life insurance during our working years even though the statistical likelihood of death during this time period (the risk), is somewhere around 2 percent. Even if death occurs and a claim is filed, the insured will obviously never spend a penny of the death benefit. Nonetheless, we are concerned about the impact our death will have on surviving family members: the consequences.  This same reasoning explains the fact that people keep fire insurance on their homes even after the mortgage is paid off and the bank no longer requires coverage. The statistical likelihood of the house burning down is quite remote, one in a thousand or higher, but we wouldn’t go a day without coverage. And many middle and upper income families might even be able to pay to rebuild their homes from savings or refinancing. Few of us ever think the worst will happen, but we still wish to avoid the consequences, no matter how unlikely. So, once again, we transfer the risk and insure.

Here’s is the irony about Long-Term Care. Unlike dying while young or having a major house fire, the odds of eventually having Long-Term Care needs are quite high; a flip or two of a coin. Yet this data about risk is often ignored. Unfortunately, so are the painful consequences on loved ones. The role of Long-Term Care insurance has less to do with you and your needs than you might think. Someone will probably find a way to take care of you when you need custodial assistance. But at a physical, emotional and financial cost.

The real reason to consider Long-Term Care insurance is to recognize the serious burden caring for you will place on your spouse, your children and other loved ones. Besides the significant financial hardship associated with Long-Term Care, which often depletes retirement savings, family caregivers report high levels of depression, drug and alcohol use, time away from work and friends, and overall deterioration of their physical well-being. When asked whether people should purchase Long-Term Care insurance, nationally-known financial advisor Jane Bryant Quinn reminds us of these consequences. “To anyone who has seen up close how much it costs to care for an failing relative or friend, the answer is “yes, for sure.”” (Newsweek, June 18, 2007)