Key Reasons to Consider LTCI for the Retirement Years
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Not to rain on anyone’s parade, but the best way to prepare for the retirement years is by getting ready for the worst that may happen. You’d always want to be one step ahead in case something happens. And this is why long term care insurance comes into the big picture of the retirement phase, by taking into consideration the custodial care and attention that one may pay for in the coming years.
An LTCI policy states that the insured will pay for the premiums and the insurance carrier pledges to cover future expenses. Although most policies designate specific limits, policyholders generally can expect to have their LTC costs covered. Most plans can cover a broad range of services, including assisted living, nursing homes, hospice, and adult day care. And yet, people still hesitate to apply for this type of coverage.
There are other ways to pay for your LTC needs, such as government-assistance programs and self-insurance. Why should you pay for an LTCI (not to mention, the often expensive premiums attached to policies) when there are other ways to pay for coverage? Let’s ponder on that idea by listing down several important reasons that make an LTCI an essential tool for the golden years.
Fluctuations in government assistance are unpredictable
Health care costs have been contributing to the increase of inflation, GDP, and average wages for some time, according to The Bureau of Labor Statistics (BLS). This statistical tidbit means that some point in the future, the government may not be able to provide more allowances for Medicare, Medicaid, and Social Security.
Some people expect for the government to be able to assist with their health care costs, but this way of thinking may prove to be fatal. Assistance from government institutions can be very limited primarily because of other issues besides health care that the country needs to focus on and prioritize.
We need to be self-reliant when it comes to future health care. Although it is crucial and reassuring to know that the government organizes programs to help cover health care costs, but government assistance should not be a guarantee to pay for all LTC needs.
Also, relying on Medicare or Medicaid to pay for LTC expenses is another mistake that most commit. Neither of those two programs may be capable of paying (if they do, only for a limited amount and only after a rather tedious qualification process) for LTC coverage, as what retirees may have initially expected.
Not planning for long term care costs can backfire
Another major mistake that some people make in regards to long term care is hoping for the best or having that belief that they won’t get sick when they reach the age of retirement. This mistake often leaves a person to depend on their family or loved ones to either pay for their health care costs or attend to their LTC needs.
Another careless decision is to assume that you can pay for your long term care needs with your savings and still be considered financially sound. Many people who rely on their savings to pay for their LTC needs end up spending all of their hard-earned money just to cover their daily expenses.
A better approach is to plan directly for possible needs and expenditures with an LTCI. This way will give you the breakdown of costs, preventing the mistakes that arise from inaccurate assumptions on how much will be needed, or becoming a burden to your loved ones. Also, this approach allows you a much more flexible approach to saving funds for your nest egg – you’d want to have money to pay for what matters the most during the golden years, without having the inconvenience of dipping into funds meant for a rainy day.
LTCI helps cover costs when you need it most
LTCI is often negatively portrayed as a “waste of money” because some assume that they will never need or use it. Again, this thought rests on the assumption that you will not get sick in your elder years. Some who see LTCI as a waste of money are missing the point of what insurance is for and was designed to resolve. It is a guarantee that when the time comes for you to need coverage for LTC costs, it will be ready to pay for those care costs. This security and the peace of mind it grants is exactly the purpose of LTCI that people often overlook.
Medical technology has significantly improved, and in effect, we are all living longer. However, longevity does not mean being immune to certain illnesses. The truth is, most of us who live longer are not living alone. This scenario often leads to having our loved ones take care of us, and sometimes we become a burden in their personal lives.
An LTCI policy will guarantee two things: you will be given the chance to live independently, and you will be able to do so with a greater financial stability. So why consider other methods, when LTCI directly address a specific need?
What do you think?
Are there other benefits that LTCI can address to over other methods such as Medicare or Medicaid? Should LTCI be an essential step when planning for one’s retirement? Share your thoughts with us in the comments below.