Broker Check

Long-Term Care: Managing a Potentially Costly Risk

| February 04, 2019

At Cornerstone Financial Services, we use a “panoramic planning” methodology that manages both risk and assets. In our opinion, risk isn’t discussed enough in general, especially since it’s such a big variable within the entire “portfolio” of your life.

In other words, risk is part of the equation no matter what.

Risk is Everywhere

If you drive to and from work, you’re taking on risk. If you invest 100 percent in equities, you’re taking on risk. Yes, they’re different risks, but in the end, you’re potentially affected.

Thankfully, risk can be managed. It’s why insurance exists.

For instance, life and long-term care (LTC) insurance can address health and well-being risks, while also providing financial assistance to loved ones. Yet, most people either don’t realize that, think they don’t need insurance, or don’t understand it.

That’s certainly accurate when it comes to LTC coverage. And the fact is, 52 percent of people age 65 and older will have a disability requiring some form of LTC, according to AARP.

So, we’re kicking off a blog series. This initial post covers the basics of LTC insurance, including what it is, why you’d need it, and how to identify good plans.

Laying Out LTC

LTC is the help given to people who can’t perform “activities of daily living” (ADL) like bathing, dressing and more, because of cognitive impairments or other health issues.

Sometimes LTC can include assistance with medication, personal hygiene, cooking and such, along with specialized therapy services.

Health professionals deliver the care either at home or in medical facilities like assisted-living and nursing homes.

Why Get LTC Insurance?

LTC costs can add up quickly, and they aren’t covered by Medicare or group health insurance. Medicaid provides coverage, but only after you exhaust all your assets.

So in effect, LTC insurance protects your assets and your lifestyle. With an LTC plan, an insurance company funds your care, not you or your family.

Some foundational reasons to have LTC coverage:

  • Fund costly LTC services
  • Protect assets like retirement plans and real estate
  • Offer peace of mind
  • Provide independence, choice in care

What Should an LTC Plan Cover?

There are three pillars of quality LTC coverage – home care, facility care, and care coordination.

Home care is help keeping up your home – including chores, day care, homemaker services, hospice and more.

Facility care means coverage for places designed for LTC, like assisted-living facilities, nursing homes and Alzheimer’s facilities.

Last, but not least, is care coordination. This means help from a trained professional who will assess care needs, find medical providers, design a care plan, monitor care, assist with claims, and more.

As the AARP data indicate, there’s a good chance you or your family will need LTC. To help, our future posts will examine different LTC situations, the lessons we can learn from them, and the value of being prepared.

Securities offered and sold through CoreCap Investments, Inc., a registered broker/dealer and member FINRA/SIPC. Advisory services offered through CoreCap Advisors, Inc., a registered investment advisor. Cornerstone Financial Services and CoreCap are separate and unaffiliated entities.