BUSINESS & PROFESSIONAL
Long-Term Care Insurance:
The Basics
L
ong-term care, while not inevi-
table, is a possibility for millions of
Americans. In fact, the American
Society on Aging estimates that Americans
who are age 65 and older have a 70%
chance of requiring long term care. (1)
Long-term care can be very expensive.
A recent survey revealed that the average
annual national cost for nursing home care
is over $70,000. Depending on where you
live and what type of facility you choose,
the cost may even be higher. (2) Home
healthcare, too, can prove to be a sig-
nificant drain on resources. The national
average cost of home healthcare is over
$52,000 annually. (3)
The question becomes how do you pay
for long-term care when you need it. One
answer may be long-term care insurance.
Long-term care insurance can provide you
with the ability to meet a considerable por-
tion of these costs over an extended period
of time.
Benefit
• Other policy features such as inflation
protection
The features and the options of the
policy can usually be customized to fit both
your needs and your budget.
WHAT ABOUT INFLATION PROTECTION?
Long-term care costs continue to rise. To
protect yourself at least partially, you may
generally choose from a variety of inflation
protection options that offer increased cov-
erage over time. The options vary by policy.
WHAT ABOUT MEDICARE, MEDICAID AND
OTHER MEDICAL INSURANCE?
Some consumers decide against purchasing
long-term care insurance because they
mistakenly believe that their medical
insurance or Medicare or Medicaid
will cover them. Unfortunately, these
assumptions are generally not true.
Traditional medical insurance typically
does not cover long-term care expenses.
Medicare may cover medically necessary
HOW DOES LONG-TERM CARE
care at home or at a skilled nursing facility
INSURANCE WORK?
on a part-time or intermittent
Typically, a long-term care
basis, but, generally, Medicare
insurance policy provides ben-
covers these expenses only after
efits if you:
a required minimum hospital
• Require assistance for an
stay of three days, and cover-
extreme cognitive impairment
age for an extended period is
such as Alzheimer's disease
limited.
• Can not perform a speci-
Medicaid provides certain
fied number—usually at least
types of coverage only after
two—of what long-term care
people have depleted most of
policies refer to as activities of
their assets.
daily living, such as bathing
Your Financial Advisor can
and dressing.
work with you to help you
Most policies pay a maxi-
decide whether long-term
mum daily (or monthly) ben-
care insurance is appropriate
efit for a specified number of
Robert Levy,
for your individual situation.
years, known as the benefit
Sen ior
Additionally, you should work
period. This maximum daily
Vice-Pre sident-
closely with your Financial
(or monthly) benefit is simply
Invest ments
Advisor, as well as your legal
the maximum amount the
and tax advisors, to make certain any long-
insurance company will pay per day (or
term care policy you consider is coordi-
month) for nursing home or other long-
nated with your investment, retirement and
term care costs.
estate planning strategies.
Long-term care policies also include
a lifetime benefit or the maximum total
IMPORTANT CONSIDERATIONS:
amount the insurance company will pay.
• Insurance products are made avail-
The lifetime benefit is typically calculated
able by UBS Financial Services Insurance
by multiplying the daily (or monthly) ben-
Agency Inc. and by other insurance-
efit by the benefit period.
licensed subsidiaries of UBS Financial
If your long-term care costs are less than
Services Inc. through third-party insurance
the maximum daily (or monthly) benefit,
companies unaffiliated with UBS Financial
you may receive benefits for a longer peri-
Services Inc.
od of time than the benefit period. But you
• UBS Financial Services Inc. does not
will never receive more than the lifetime
offer tax or legal advice. You must consult
benefit. Most policies impose an estab-
your tax advisor and attorney regarding
lished waiting period, called the elimina-
your specific situation.
tion period, before any benefits are paid.
• The premiums initially listed on long-
term care policies are not guaranteed and
WHAT DOES LONG-TERM CARE
may change over the lifetime of the policy.
INSURANCE COVER?
Although some basic policies cover only
Rob Levy is a Wealth Advisor and Senior Vice President
nursing home costs, long-term care poli-
- Investments at UBS Financial Services in Farmington
cies generally cover costs for skilled nursing
Hills. For more information, he can be contacted at
care, intermediate care and custodial care.
(248) 737-5477 or robert.levy@ubs.com .
You can typically receive this care at an
The information contained in this article is based on sources
assisted-living facility, adult-care center or
believed reliable, but its accuracy cannot be guaranteed
at home. Coverage can vary greatly from
This article is for informational and educational purposes
insurer to insurer and policy to policy.
only and should not be relied upon as the basis for a
Each policy has its own eligibility require-
purchase decision.
ments, restrictions, and determination of
benefits and cost.
HOW MUCH DOES LONG-TERM CARE
INSURANCE COST?
The actual cost of the premiums you pay
depends on several factors, including:
• Your age when applying for the policy
• Your state of health when applying for
the policy
• The length of the benefit period and
the elimination period
• The types of services offered
• The Maximum Daily or Monthly
FOOTNOTES:
1. The American Society on Aging, "Americans Fail to
Act on Long-Term Care Protection," May 2003.
2. Genworth Financial, '2006 Cost of Care Survey,'
March, 2006.
3. Genworth Financial, '2006 Cost of Care Survey'
March, 2006. Home healthcare costs based on
rates for Home Health Aids at $25.32/hour and a
40-hour workweek.
This article has been written and provided by
UBS Financial Services Inc. for use by its
Financial Advisors.
ADVERTISMENT
36
March 11 • 2010
1568670
executive tips
Stock Market:
In Or Out?
W
ell, I will
first empha-
size that I
am not a
financial adviser nor am
I here to recommend to
you the best investment
strategy. But I can share
insights and common-
sense methods to look at
what is potentially the best
way to protect yourself
and your family in these
rollercoaster times.
We need not rehash what the 2009
markets did and how the nosedive
in wealth occurred almost without
"warning" and how the slow recov-
ery keeps stalling along the way.
What is the best strategy? Get
the team. Each person and family
has very different needs and wants,
but the following play a key role.
The team will help make the best
decision with you:
• Age — how old are you and
your spouse? How many years will
you keep working if you even have
a job at this point?
• What level of lifestyle do you
expect when you no longer work?
• What assets do you have now
and, based on your responses to
bullet points 1 and 2, what is the
deficit that exists now?
• If you are raising a family, what
options do you have for your chil-
dren and their education — 529s or
other types of investments?
• How is your health and what
is reasonable when it comes to life
insurance and long-term care, wheth-
er for yourself or what your children
may well need to take care of you?
Your team is crucial; your CPA
can help look at the financials you
have now and, going forward, give
that tactical level of advice. Your
financial adviser then should get the
answers to the questions; blend that
with the tactical insights and offer
recommendations.
One item that I feel strongly
about: somewhere in all the ups and
downs you must have some portion
of your money in the stock market.
In the past 20 years, if you look at
the stock market and the ups and
downs that occurred, you would
see the following: From 1989-2008,
the U.S. stock market
(based on S&P 500
Index) has gained on
average of 8.4 percent
per year. However, if you
missed the 10 best days
of the market (out of
7,300 days), your aver-
age return would have
been 4.9 percent. If you
missed the best 30 days,
your return would have
been .6 percent per
year. Missed the best 40
days? You lost 1.2 percent per year.
This means you have to be in,
stay in and know that some portion
of your money is key to getting the
gains this can offer. The balance in
one's mix, or portfolio, is why you
must have partners. The team will
help you know what to put in the
stocks and what to hold in cash or
CDs or bonds or other investment
options.
The other key is to diversify. If you
have not done so by now, do it —
yesterday. In today's world, betting
that one company will keep growing
or even one industry (think Internet
bubble and burst!) is dangerous.
But there is a way to mix and match
investments that will allow moderate
risk and rewards; this is key as we
see our way out of this economic
quagmire.
In the end, this takes time. It
takes an honest look in the mirror
and what you really want. Then get
that team. Whether you are making
$30,000 per year or $500,000, you
still need the team; and the sooner
you know that the better.
I had my first financial adviser at
age 23 when I graduated from col-
lege; I spoke to her every week for
years. Today, hardly a week goes
by that I am not e-mailing or talking
with my UBS representative, Kelly
Petrocella in Birmingham. These
good, consistent habits help in the
good times, but even more in more
challenging times.
So: Diversify, buy some portion in
stocks and get the team on board!
F. Kevin Browett is chief operating officer
of Jewish Renaissance Media, parent
company of the Detroit Jewish News. He
is a former executive with Kmart Corp.