Resolutions and Gift Cards and Long Term Care
'Tis that time of year.... Time for keeping, breaking or even ignoring our New Year's resolutions.
Yes, most of us want to get into better shape, which is why exercise more or lose weight is the top resolution for 38% of us. However, I'd like to nominate for your consideration a resolution that I haven't heard reported on any lists.
Ready? Here goes:
"I resolve to implement a plan to finance my future long term care."
[Thinking - happily - that you've already taken care of this? Then forward this email to your friends and relatives - most of whom probably haven't procured policies - to encourage them to work on this most noble resolution!]
Yes, for many of us facing holiday bills and competing priorities for our hard-earned money, it may be difficult to think about redirecting money into long term care insurance. That's actually one of the best arguments for taking the plunge - making the resolution - and, finally, doing it.
After all, if you think it's difficult to prioritize funding a plan today, imagine how difficult it will be to easily come up with the much higher amount of cash needed when you are no longer working and suddenly facing care costs? Care that can cost upwards of $100,000 a year - and sometimes even more?
Have you received or bought gift cards?
It occurred to me that a long term care insurance policy could almost be described as a type of "gift card" for long term care. There are a few differences, an important one being that traditional long term care coverage locks in a disproportionately large benefit with a modest initial premium payment. So, buying a long term care policy is more like buying a $100 gift card - redeemable exactly when care is needed - for less than a few dollars. (The numbers depend on your age and amount of benefit you wish to secure.)
There are other similarities. At claim time, money in a long term care insurance policy can only be used for long term care* - not.,for example, on gifts for the grandkids or new kitchen cabinets. That restriction is like a gift card - you can't use a gift card from one establishment at a different business down the road.
Another similarity between gift cards and traditional long term care policies is the ability to choose how to spend the money. When you walk into a store with a gift card, you are secure knowing you can buy something - up to the gift card's limit - without having to spend your own money. Long term care insurance policyholders have that same luxury. When faced with the need for care, they can choose among their policy's covered services to make their own determination of what services they want to buy - using the insurance company's money - up to the policy's limit.
Back to resolutions. Am I saying that by this time next year you should "implement a plan to finance my future long term care?" Yes.
And, if your birthday is at the beginning of the year, you'll want to get started soon. Each birthday that passes before you take the plunge raises the premium you'll pay. This is because the actuaries at the insurance company know you have less years to pay premiums before claim time.
The fact is that the majority of us will need long term care at some point in our lives. The uncomfortable truth is one year may be THAT year for any of us... the year we need long term care. How grateful we will be to our younger selves that we didn't put off for the decision to purchase long term care insurance.
Happy New Year!
*A small percentage of policies are cash benefit policies, which pay a "cash benefit" to be used at the insureds' discretion.
Brigitte Bromberg, MS, CFP®, CSA® is an independent insurance specialist who provides unbiased, consultative, solutions for long term care, life and disability insurance needs.
For more than 30 years Brigitte has worked diligently to provide clients the information and insight they need to make informed insurance decisions. President of Winning Strategies Group LLC, Brigitte loves speaking to groups, and she also loves helping people implement creative, smart insurance strategies.