Dol­lars & Sense

Liv­ing Longer

RSWLiving - - Departments - BY MAR­SHA MCDON­ALD

The long of it … It is ob­vi­ous to all of us that peo­ple are liv­ing longer. In fact, the mor­tal­ity ta­bles for life in­sur­ance have re­cently been raised from 80 to 120 years. While it is a good thing that we’re liv­ing longer, it does create a greater need for care dur­ing these bonus years. And that care is ei­ther go­ing to come from rel­a­tives or a pro­fes­sional care­giver.

Most of us don’t want to be a bur­den on our fam­i­lies, and in some cases we don’t have fam­i­lies who could or would take on that re­spon­si­bil­ity. How­ever, it is es­ti­mated that 70 per­cent of folks 65 and older will need care. But the more sur­pris­ing statis­tic may be that 40 per­cent will need care prior to that. For­tu­nately there are a num­ber of op­tions, in­clud­ing longterm care in­sur­ance poli­cies, rid­ers on other life prod­ucts or an­nu­ities and even ac­cel­er­ated death ben­e­fits on whole life poli­cies, which can help.

But first, just to give you some idea of the cost you could in­cur, there was a re­cent study re­leased by John Han­cock that stated the av­er­age pri­vate nurs­ing home ex­pense as $258 a day, which was $94,170 an­nu­ally, and that it is ex­pected to in­crease 3.4 per­cent a year. The av­er­age cost of in-home care was $29,640.

But don’t let those num­bers lead you in to to­tal de­spair! If you haven’t pro­vided for long-term care ex­penses, just know that the best time to do some­thing about it is sooner than later, and there are a num­ber of ways to go about get­ting the help you need.

Are You in Good Health? There are long-term care in­sur­ance poli­cies avail­able, but you need to be in good health and have a good health his­tory in or­der to qual­ify. And, the best time to get a pol­icy is al­ways be­fore you need it. The ages of 55 to 60 are nor­mally rec­om­mended as the op­ti­mal time, but in­di­vid­u­als well into their 70s may even be able to qual­ify too. The pre­mi­ums in those cases of course are much higher, but even with high pre­mi­ums it can be a frac­tion of the an­nual out-of-pocket cost of a nurs­ing fa­cil­ity.

Also, depend­ing on your health, you may be able to qual­ify for whole life in­sur­ance that pro­vides a rider for chronic or longterm care at home or in a fa­cil­ity. In ad­di­tion, there are poli­cies that al­low you to ac­cess a sig­nif­i­cant por­tion of the death ben­e­fit, which are called ac­cel­er­ated death ben­e­fit en­dorse­ments, which ap­ply to crit­i­cal, chronic or ter­mi­nal ill­ness.

But, What If You’re Not in Good Health? There are still al­ter­na­tives, which can as­sist if you are not in good health or have had a se­ri­ous ill­ness in the past. Fixed an­nu­ities with life­time rid­ers can pro­vide an in­come-dou­bling fea­ture, which does just that. It dou­bles the in­come you are re­ceiv­ing monthly from the an­nu­ity for three to five years depend­ing on the pol­icy.

The good news about the in­sur­ance chronic-care rid­ers and the an­nu­ity in­come dou­bling fea­ture is that these only re­quire a let­ter from your doc­tor stat­ing that you can­not do two of the six of your daily ac­tiv­i­ties such as bathing, dress­ing, toi­let­ing, feed­ing your­self, trans­fer­ring from a bed to a chair or con­ti­nence. In some cases you can also re­ceive care from a fam­ily mem­ber at home if you pre­fer and still col­lect on the pol­icy.

And What About Medi­care? Medi­care and other health in­sur­ance only cover short-term re­cu­per­a­tion or re­ha­bil­i­ta­tion from re­cov­er­able events. Med­i­caid will cover the cost of care in a fa­cil­ity of their choice if you have no as­sets. If there is a spouse still liv­ing at home, some as­sets and in­come may be pro­tected to pro­vide for them as well.

The short of it … If you haven’t pre­pared to cover the cost of care for your­self or for your loved ones in these lat­ter years you may only have a small win­dow of time to do some­thing about it. You can even gift it to some­one who may not have cov­er­age. In 2014 the IRS al­lows up to $14,000 to be gifted and there is no limit to the amount given over time. The most im­por­tant thing to do is to know your op­tions and make a de­ci­sion.

Some things about get­ting older are just not fun, but when we take care of our fi­nances, life is a lot bet­ter for us and for our fam­i­liesn.

Mar­sha McDon­ald is a fi­nan­cial ad­vi­sor with Ad­van­tage Re­tire­ment Group with of­fices in Fort My­ers and Naples. For more in­for­ma­tion visit ad­van­tagere­tire­ment­group.com or call 239-561-1155.

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