Miconceptions Abound With Long-Term Care Planning

Publish Date:

Tuesday, March 6, 2018 10:29 am EST

News Organization:

The Greenville Sun

A study of consumers and financial advisors released by Lincoln Financial Group finds there is confusion among most Americans about long-term care, including who is at risk, the cost of long-term care, how it will be covered, and who will provide this care if needed.

"Long-term care planning is increasing in importance by the day with more and more people approaching or in retirement, and living longer," said Bill Nash, VP of MoneyGuard Distribution, Lincoln Financial Distributors, in a news release. "Being proactive before care is needed can make a lasting impact on the quality of care you receive, the ability to maintain dignity, and on your family's financial security."

MISCONCEPTIONS

According to the study, only a third of people believe they will need long-term care in their lifetime, often leading to reluctance to plan appropriately. However, the Department of Health and Human Services estimates more than one in two people turning 65 will need some form of long-term care in their lifetime.

Consumers surveyed estimated the annual cost of nursing home care at $54,000, when in reality, national averages for a private room are in excess of $100,000.

Most people surveyed believe they would pay for care through Medicare or health insurance, however these options only cover very limited and specific types of long-term care. The second most cited source to pay for long-term care was personal savings and assets, yet only a third of consumers felt confident of having the financial resources to pay for long-term care.

"Comprehensive planning should include meaningful discussions with both family members and a financial professional together to understand the realities and risks of long-term care, lay out care preferences, and assess care options and how they would be paid for care," continued Nash.

Nearly all financial advisors surveyed agreed, families should discuss plans for long-term care before they actually need it, ideally around age 50.

However, 93 percent of advisors said consumers are not sufficiently planning for long-term care needs. That outlook was supported by the study's consumer findings around planning: only 52 percent of people said they have spoken with their spouse about who would provide care, 35 percent have spoken with their parents, and just 29 percent with their children. In each case, even fewer have discussed how such care would be paid for.

OPTIONS

The survey found 93 percent of advisors believe it is smart for clients to a have long-term care insurance solution. The advisors estimate clients without a long-term care insurance solution can spend their savings two-to-three times faster than expected if long-term care is needed.

Today there are many different types of long-term care funding solutions available in the market that can help mitigate the costs of care events, allowing a client to select a solution that fits their specific care and financial needs. Solutions available in the market, in addition to long-term care insurance, include hybrid life insurance/long-term care products, and riders that can be added to annuity and life insurance products.