Death is Easier, Financially
In my last column, “What Happens if You Live?”, I discussed living but not being able to make your own decisions and the role of Estate Planning. There are also significant financial ramifications if you are living and need care, regardless of your mental state. The likelihood of needing assistance during your working years is actually far greater than death, and in retirement, long-term care costs continue to rise.
Working Years: 60% of employees have access to group life insurance, while only 34% have access to disability insurance. Additionally, of the employees offered long-term disability insurance, only 33% take advantage of the benefit. This is a huge risk, especially for single income households, where the most valuable asset is often your ability to earn.
One in four workers will experience a disability of greater than 3 months at some point in their career. One in seven can expect a disability of 5 years or more. Not only is income lost, it takes an average household $17,690 more per year to meet the same standard of living.
Retirement Years: We are living longer but not necessarily healthier lives. Most insurance companies have left the long-term care marketplace, existing policyholders are seeing premium increases, lifetime benefits are no longer offered, and 43% of affected households list “just getting by” as their current financial priority.
Baby Boomers will continue to turn 65 at a rate of 10,000 per day through 2030 and seven in ten will need some form of long-term care. Of those, 18% will need more than 1 year of care in a nursing facility. The national average for in-home care is almost $25/hr. and it is estimated that only 32% or retirees have a plan in place for how they will receive care.
Disability and long-term care insurance can be complicated and even intimidating- waiting periods, definitions, hybrid policies, and rider options. As part of your Financial Plan, we can run an analysis and make recommendations to decrease your risk exposure. We encourage you to discuss in more detail with an Advisor.