I have been reading articles which are critical of extended caregiving benefits (Long Term Care Insurance) or reasons why owning caregiving benefits has little value.
1. Caregiving is expensive.
2. Long Term Care benefits are expensive
3. If you do not use the plan, the premiums go to money heaven
and not a beneficiary.
4. I will self-insure or be in denial about caregiving and wait for the
crisis to occur and then my family will be in worry and panic with
how to care and pay for caregiving services.
5. Family and friends who have no choice but to be personally
involved with caregiving will be supported where they work or
if self-employed, employees will keep the business productive.
6. No worries if you have assets over $2 million.
Since 2009, long term care plans have been in transition for these reasons:
a. Interest rates have been low affecting short and longer term fixed
investment returns.
b. Actuaries forecast that a percentage of people who own plans would cancel them after a period of time, similar to owning life insurance. This did not occur. People realized that these plans are valuable so the cancellation rate is very low.
3. People believed or were led to believe that the would only use the plans for a short period then die. This has changed. People need care for longer periods before they die.
There is an important factor which is seldom considered which is the first question I ask. Where will your caregiving begin and not where will it end? A person maybe 6 months to a year in a care center may have caregiving services for several years while living at home.
Before owning a plan consider your cash flow, your capital which is producing cash flow, your lifestyle, and your commitments for the future.
People own a caregiving plan because they love their family and they want to make sure that should caregiving be needed, it will not disrupt the life of a family.
The affluent understand this and would rather own LTC plans and transfer some of the caregiving payments to an insurance carrier to pay for care services.
Caregiving is not about you, it is about your family and how they will be affected.
a. Most people begin caregiving at home.
b. I have read studies of how much income, savings, and benefits is forfeited by family and
friends caring for people who need care services. It is in the billions.
c. There is an emotional and physical toll on people who care for family and friends?
d. Why would people accumulate or inherit assets for lifestyle want to spend or to go on Medicaid work with an elder care attorney to transfer property and assets just in case they need care services?
e. Why would people spend a lifestyle of accumulating capital for lifestyle and legacy and transferring to family want to liquidate all or a portion of their estate for caregiving services?
f. Why would anyone want to spend 100 cents on the dollar versus spending cents on the dollar to own a caregiving plan which will pay a good portion of caregiving expenses?
g. Money makes the choice whether people remain at home or transfer to a care center. Why?
It may be that it is better to be in a care center. Another reason is family and friends are
tired, frustrated, and need to get on with their lives and careers. h. Ask an economist whether studies were of value when they or their loved ones needed care. I doubt their impulse is to say, "sell everything and spend it on caregiving and then go on Medicaid."