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Jan 27

Planning for Long-Term Care is Gentle On My Mind

Glen CampbellThis week’s blog is spotlighting the beautiful rendition of Glen Campbell’s “Gentle On My Mind” by The Band Perry at the 2014 Country Music Awards. This refreshing and talented group is from Greeneville, Tennessee, a small town in my neck of the woods in East Tennessee.

Glen Campbell is now a permanent member of the ranks of Alzheimer’s victims. The first music artist to make #1 on the country and contemporary charts at the same time, he is Stage 6 now and sometimes requires two caregivers to be sure he is safe according to his wife in this interview.

My cousin married an oral surgeon in 2000. He adored her and did everything he could to make sure she was happy. This was the cousin who helped me on my 23 city agent training tour in 1994, so she knew how important long-term care insurance is. Thankfully, she convinced him to take out policies on the two of them in 2003. When he started exhibiting tremors and memory issues a few years later, she was so thankful for that decision! We figured out that he paid $18,090 in premium before going on claim in August of 2010. His premium stopped and he started receiving $5,100 a month that would grow at 5% compounded annually for the rest of his life. He got all the premium back in 3.5 months. Yes, that was an older policy with unlimited benefits and much lower premium than today. But before you discount this story, I need to tell you that I just updated The ABCs of Long-Term Care Insurance book and the answer came out the same – all the premium was paid back in 3.5 months and that’s without having a claim for 30 years!

Here’s the scenario: 50 year old with couple’s discount; $140 daily benefit ($4200 monthly), 90 calendar day waiting period, three year benefit period, 5% compound inflation. This plan will pay 2/3 of the cost of care in the Southeast but the formula I am teaching you will hold true for higher benefit plans in other parts of the country because the cost of care is so much higher there.

With a monthly standard premium of $167 for the above plan, the insured would pay about $60,000 in 30 years for a benefit pool of over $600,000 and the payback is still about 3.5 months for a claim that starts in 30 years. Take a look:

Quick Payback

Yes, there will be class rate increases but there’s a huge difference between $60,000 and $600,000! [Actually, it would be quite a bit more than $600,000 as the daily benefit will continue to grow at 5% compound each year even though the premium is waived.]

Someone is diagnosed every 67 seconds with Alzheimer’s. People diagnosed over age 65 live an average of 4-8 years but some live as long as 20 years. (2014 AD Facts & Figures, p. 28)

Historically the cost of care growth has averaged just under 5% compound since I got in the LTC insurance business from $56 a day to the current cost of $212 a day per the Genworth cost of care survey. [You can calculate it for yourself by using the “Return Rate” tab on the investment calculator at Calculator.Net.] That will buy 10 hours a day of home care at $20 per hour or semi-private care in a nursing facility. It will also pay for the average memory wing in an assisted living facility of about $4500 a month.

Using only 4% compound growth, the $212 will be $660 a day in 30 years, or almost $250,000 a year!

We think of that as the worst-case scenario if our loved one ends up in a nursing facility with those astronomical prices.

But less than 20% of LTC happens in a nursing home (p. 26 of the latest report from National Health Care Statistics) and the Alzheimer’s Association confirms that 75% of Alzheimer’s patients are cared for at home. So to challenge your perspective, could the worst scenario be keeping our loved one at home if after years and years of bearing the caregiving stress, the caregiver

develops cancer or some other deadly disease because all those years of stress compromised the immune system? [Real life story: my mother cared for my grandfather 10 years at home and died at 54 with breast cancer.]
winds up in a divorce because the son-in-law or daughter-in-law couldn’t deal with the caregiving? [2/3 of caregivers who live with the Alzheimer’s patient report marital strain – p. 60 Alz. Facts & Figures report]
is not able to send grandchildren to the college of their choice due to savings lost when the caregiver couldn’t work full-time? [The average lifetime cost of lost wages, Social Security and retirement savings is over $300,000 per the MetLife Study of Caregiving Costs to Working Caregivers.]

The outlook is that by 2025, the number of people with Alzheimer’s will increase by 40% to over 7 million. Could this be you or your family members? Are you making everyone in your family know that there is a way to plan ahead to reduce the impact of higher emotional and physical stress, strained family relationships and lost employment opportunities? An increasing number of baby boomers are dealing with caregiving issues with family members and learning first-hand how very difficult it can be.

An easy way to start the conversation is simply to go over my little book The ABCs of Long-Term Care Insurance. You are welcome to purchase one from my online store along with my big book Protecting Your Family with Long-Term Care Insurance, or I’m happy to send you one free if you are interested in my help with long-term care insurance. If you are, just complete the questionnaire at https://www.gotltci.com/contact-us/ and include your address so I can send it to you and offer you a no-obligation consultation for some simple education and recommendations from me based on your personal situation.

Long-term care is always on my mind…gentle? Maybe not. I just want to make a difference in the lives of caregivers with long-term care insurance, and that can only happen if you help me spread the word. Now, if you didn’t listen, take a couple of minutes out of your day and enjoy this amazing and timeless song.

Phyllis Shelton

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