The time has come. You’ve thought about it, you’ve researched it, and now you’re ready to purchase a long term care insurance policy. You begin the process by requesting quotes from various companies online, you speak with local agents, and you see if your employer offers a program. You obtain as much information as possible to make sure you get the “best “deal” out there. Then you make your decision. The choice is XYZ policy from ABC insurance company.
The broker you choose to work with sits down with you and begins to go through the medical questions. They seem endless, and to some degree they might be. You get through the questions about your heart, whether or not you’ve ever had cancer, what prescription medications you’re on, who your doctor is, broken bones, arthritis…and then it hits. All the work you’ve done, the hours you’ve spent doing research and analyzing companies. Only to find out you won’t be able to obtain coverage because you answered one of the questions incorrectly. Maybe it’s because you told your doctor you were running late because you couldn’t remember where you put your keys that morning, and they noted it in your medical records you had memory loss, Maybe it’s because something you thought wasn’t a big deal is to the insurance company.
Unfortunately, this is sometimes the case. People who think they are perfectly healthy (and for all intent and purposes are) don’t qualify for long term care insurance coverage. This can be a startling reminder that, after all, we are only human. In some cases the decision can be permanent, meaning you’ll never qualify for coverage as long as you live. In other cases, the inability to get coverage today may only be temporary.
For example, you might be receiving physical therapy for a shoulder injury, and the insurance company says they aren’t willing to offer you coverage at this time. Well, if you wait 6 or 12-months (depending on the carrier) after you’ve completed the physical therapy it is likely you will be able to obtain coverage. This can be the case with a number of different scenarios.
As we get older it is more likely we will pick up the occasional cuts and bruises along the way. But, what happens when one spouse is insurable, and the other isn’t. Some couples may feel it doesn’t make sense to secure coverage for one spouse, and not the other. But is this really the best decision?
Assuming the average nursing home stay lasts approximately 2.5 years at an annual average cost of $70,000 per year, you could potentially have to pay $165,000, if not more (and in some cases possibly less). If you consider this for a husband and wife or domestic partners long term care costs could exceed $300,000 per couple.
So, now reality may be starting to set in. You might have to pay for the care of the spouse who is uninsurable. What happens if they require care prior to the insurable spouse? The first thing you will want to do is make sure you are liquid enough to pay for care. Know where the money is and how quickly you can access it if the need arises. If you own rental properties how much net cash flow will you have on a monthly basis, determine whether or not you’d be able to sell a property immediately at a fair price. If the money is in a retirement account, like a 401(k) or IRA, will you have to liquidate current stock positions to get to the cash to pay for care? How long might that take? Do your homework, know what options exist. Plan accordingly.
The unfortunate part about the long term care planning process is we don’t know if or when we might need care. If an uninsurable spouse requires care before the currently insurable spouse, how much money will it cost to provide that care? It could be two weeks, it could be ten years. We don’t know. Now compound that with the possibility of having to pay for long term care for both couples.
The other side of the coin is what if the insurable spouse requires care before the uninsurable spouse. It’s the same scenario. If the insurable spouse purchased long term care insurance there should be little to no impact on the family’s financial position.
In a situation where one spouse may be insurable, and the other may not, it makes a lot of sense to consider long term care insurance for the healthy spouse. It can relieve the financial and emotional stress of having to pay for two long term care events out-of-pocket. It eliminates the risk of having to rely on family members, such as children, brothers, and sisters, to have to pay for the necessary care you might need to maintain an independent lifestyle.
The most important thing you can do before spending hours researching and analyzing policies is to speak with a long term care insurance professional to determine whether or not you are insurable. Once you’ve had that conversation then begin the informational gathering process. Speak with that professional about what you want from a policy and how you would like it to perform. More than likely that individual will be able to provide you with all of the information you need at a fraction of the time.
A long term care event can be the single, most detrimental event to a family’s finances. It can create stress, emotion, and fear. Whether or not you obtain long term care insurance quote make sure you have a plan in place before it’s too late.
