Money Matters

presented by: Vision Financial

The estimated cost for nursing home care in Alabama in 2017 was $176 a day or nearly $65,000 a year. Home healthcare averages $38,000 per year. These are daunting numbers for sure. How can one prepare for these expenses? Health Insurance and Medicare do not cover long term care needs. For most middle income consumers the best answer is long-term care insurance. (www.longtermcare.acl.gov.)

These policies come in two basic programs, one is what I call a “use it or lose it policy,” where the policyholder pays a premium for a certain amount of coverage. If the need arises, you use it, if it doesn’t, well, you’ve paid the premium, much like your car or homeowners insurance. Just like your car or homeowner’s insurance, premiums may increase from time to time based on claims experience of the insurance company.

Another type of long-term care insurance is what I call the “somebody gets something somewhere policy.” Essentially, it is a life insurance policy that carries a long-term care rider. Several companies offer this type of policy. It answers the question, “what if I don’t need long-term care?” If you don’t need the long-term care benefit, there is a cash value element that you can use as you see fit. If you die suddenly, your beneficiaries will receive the death benefit. Of course, if you need long-term care coverage, it’s there. One way or another, your premium dollars don’t become unutilized canceled checks like they would in a “use it or lose it” policy. In most of these hybrid life insurance policies with long-term care riders the premiums, once established, never increase.

There are some important terms you will need to be familiar with in researching policy features.

Elimination period, (usually 90 days): You will have to pay these expenses until coverage kicks in. Think of it as a deductible.

Activities of daily living: There are six of them and one must be certified as being unable to perform two or more of them to go on claim.

Length of coverage: Some benefits are life time, some policies can limit coverage periods to four or five years. Limiting coverage obviously reduces premium amounts.

Inflation riders: This can increase coverage automatically based on a predetermined inflation amount; obviously, premiums will be higher with this type of provision.

Demographically, we are living longer, and as we age, healthcare costs become one of the largest expenses experienced by people in their golden years. Long-term care insurance is one way to reduce the worry of how to cover these costs. Two very good resources for additional information can be found at  www.dibbern.comand www.longtermcare.acl.gov.

-Larry Anderson 

Vision Financial Group, Inc.

4505 Pine Tree Circle, Birmingham, 35243

205-970-4909, www.vision-financialgroup.com

Investment advisory services offered through Investment Advisors, a division of ProEquities, Inc., a Registered Investment Advisor.  Securities offered through ProEquities Inc., a registered broker-dealer and member of FINRA and SIPC.  Vision Financial Group, Inc. and West Alabama Bank are independent of ProEquities, Inc. Securities and insurance products offered are not bank deposits, have no bank guarantee, are not FDIC insured, and may lose value.