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LTCI MythsMyth #1: Long-Term Care insurance is an expensive product.

Reality: It’s important to think of Long Term Care Insurance (LTCI) as a strategy not a product. Investments like stocks, bonds, IRAs and mutual funds are created to provide you income during retirement. Most of the time, if planned well and correctly, they replace your income. But they usually don’t take unexpected illnesses or accidents into account. That’s when LTCI comes in. Instead of using your assets which you allocated for daily living to cover medical costs, you can use a side pool of money that your insurance carrier provides with long-term care insurance. And you still have your retirement money for everyday expenses.

Myth #2: It’s better to cover LTC expenses with investment returns.

Reality: As this client handout explains, for every LTCI dollar paid, $2.78 was paid out in LTCI benefits, according to a 2016 study. Investments rarely provide that level of return!  LTCI is the most efficient way to protect one’s estate from the cost of extended care needs and provides tax-free funding. It will minimize one’s need to deconstruct or liquidate his or her retirement plan for an unexpected LTC event. And according to this client handout, 10 Facts to Know About Long Term Care Insurance, 70 percent of people turning 65 years old will need some type of long-term care services and supports in their remaining years and the number of potential family caregivers that will be available for baby boomers age 80+ drops from over 7 in 2010 to 4 in 2030 and 3 in 2050, dramatically decreasing the potential for the availability of family caregivers over the next decades.

Myth 3: You should wait until you are old to buy LTCI.

Reality: Long Term Care Insurance is not just for sick and old people. While old age is the most common driver for care, younger people may need LTC as well. Here are some examples of young, well-known celebrities who are or had been impacted by a chronic illness or disability:

  • Actor – Michael J. Fox – onset of Parkinson’s Disease at age 31, now age 60
  • Actress – Terry Garr – onset of multiple sclerosis in her early 30s, she’s now 76
  • Talk show host – Montel Williams – MS – diagnosed age 43, now age 65
  • Basketball Coach – Patricia Summit – Most successful basketball coach in college BB history – Alzheimer’s – Diagnosed at age 59, died at age 64
  • Actor – Christopher Reeve – Paralysis for 12 years from a spinal cord injury at age 45, died 10 years later

Premiums are lower and payouts are higher when you buy long-term care insurance (LTCI) at a younger age. If you wait until you need LTCI, you won’t pass the underwriting process and get approved for it and will have to cover the cost of care out of pocket. Further, the cost of care is growing exponentially, and inflation on top of that won’t give you the same buying power in a few decades with the same dollar.

Myth: Clients don’t want to discuss LTCI.

Reality: Most clients will appreciate your guidance in planning for this inevitable expense. Start the LTCI conversation by questions like:

  • “Tell me, when you think of LTC, what are the first images that come to mind?”
  • “Do you know anyone who has needed care? What was the scenario and how much did it cost?
  • Have you talked about long-term care planning with your own parents?

This guide, The Long-Term Care Talk, includes other ideas to help you and your clients start the conversation.

Here at DIS, we’re seeing a resurgence in LTCI interest. It’s a great time to reintroduce the long-term care topic with your clients. Visit this page for more information and helpful resources.