View Point

Saturday, April 4, 1998

It’s crucial to prepare
now for long-term care

By Vicki J. Beck

When I first met Florence she appeared to be in pain. Every few minutes she buried her head in her hands. She described feelings of grief, guilt and worry. She had just recently brought her husband, a renowned surgeon, to an excellent nursing home. After several years of dealing with his increasing dementia at home, she understood that she could not do it any more. His aggressive attacks and falling spells were too much for her to handle.

They didn't have long-term care insurance. Another worry that nagged Florence was the dripping out of their finances when, each month, she wrote a check for $5,000 to the nursing home (now it can be as much as $6,000). Even though they had substantial savings and investments, she knew the money could run out. After all, her husband was physically very healthy. And what would happen if she needed care? She took out LTC insurance on herself, and said, "I wish Alan (her husband) had long-term care insurance."

This is clearly not a new refrain. Many people wish for long- term care insurance after the fact, in disbelief that they will need it until one of them is diagnosed with an incurable condition. Others plan for this possibility. The hard fact is that 43 percent of Americans and 70 percent of couples, 65 and over, will require care in convalescent/nursing facility sometime during their lifetime.

Unfortunately not all agents who sell long-term care policies are specialists. Some sell these policies part-time when they are also working with real estate, life insurance, financial planning, or even accountancy. The problem is long-term care policies are changing so rapidly that, in order to offer appropriate coverage to an individual or couple, a long term-care agent must be a specialist. What's more the agent should be working with more than one long-term care insurance company, so he or she is independent and not a "company representative." Then the consumer doesn't have to spend time "shopping."

One of the most critical areas of a policy is inflation protection and how it is addressed. Cost of care is increasing so rapidly that improper planning for inflation may mean that you pay for a policy for years and then end up with insufficient coverage.

Literature on the subject is generally out of date by the time it's published. Sometimes it is written by a non-specialist. Consumer advice organizations may publish rankings of long-term care insurance companies without having complete information. The fault lies with non-specialists' reports, and rapid changes in this industry.

Some of the new policy features are exciting, but again check with a specialist. All of these features vary from company to company. If you buy the wrong company's policy, you may pay too much or end up not adequately covered.

Survivorship, where one spouse's coverage is paid up for life when the other spouse dies , varies considerably.

Preferred risk discounts for lifestyle or marital status or health also vary considerably.

Inflation protection should automatically increase benefits while premium stays the same, but some don't work that way.

Restoration of benefit -- some require you pay extra for this; under certain conditions, allows full benefit amount after you've used some up.

Home care may include generous benefits for equipment, home modification, alarm systems and care coordination, but it varies considerably.

Lump-sum payments and return of premium options -- so your estate gets money back if you don't use your benefits.

Most people want to know at what age they should get LTC insurance. When they know enough to ask the question is a reasonable, less-risky approach. Alzheimer's, Parkinson's diseases, cancer, stroke, diabetes may happen under the age of 50, preventing a person from getting insured. If you wait, the premium is going to be higher anyway.

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Vicki J. Beck is a senior long-term care specialist practicing in Honolulu.