Some may be aware that one of the largest providers of long term care insurance, Genworth Financial, is currently amid a merger with China Oceanwide. Genworth Financial Group and China Oceanwide Holdings Co. Ltd. recently agreed to extend the deadline of their merger until July 1, 2018 in hopes of achieving government approval. The merger was announced in 2016 when Oceanwide offered to pay $2.7 billion for the American insurance company. This past March, the Australian regulators approved the deal moving it a step forward in addition to previous approvals from regulators in the states of South Carolina, North Carolina, Virginia, and Vermont.
At LTC Consumer, we believe Long Term Care insurance (LTCI) is an important part of long term care planning, but we understand LTCI isn’t for everybody. In fact, we’re not afraid to tell clients when LTCI may not be the best option for them.
If you’re trying to decide if LTCI is right for you, the following are a few great reasons to consider when exploring your options.
When a loved one is diagnosed with dementia, there’s often sadness and confusion around why they aren’t themselves anymore. Many people with dementia become more agitated, short-tempered, and confused by the world around them.
While these behaviors can be difficult to manage, keep in mind the challenges of a debilitating disease your loved one is facing. Learn more about dementia and tips for respecting your loved ones.
Long Term Care Insurance rates are based on your age, gender, health, and marital status. With each year that goes by, the cost of obtaining coverage gets higher. That’s why it’s important to consider your options and apply for coverage before your next birthday.
In recent years, carriers can now price coverage based on gender. Women are statistically more likely to use their coverage and for longer periods of time. This makes coverage for women more expensive than men.
Many people wonder if they need Long Term Care Insurance (LTCI) if they have Long Term Disability Insurance (LTDI) through their work or on their own policy. In reality these policies solve two different problems. So what is the difference between LTCI and LTDI?
Long Term Disability will replace a portion, normally 60-70% of your pre-disability income if you are not able to work due to an accident or illness. One of the requirements of these policies is the loss of earned income. In retirement these policies lose all value since there is no longer earned income to protect.
Long Term Care on the other hand, provides income but only to reimburse for the care that is needed. Most Long Term Care Insurance policies only allow the money to be used to cover actual care expenses incurred. The only exception to this is a cash benefit long term care policy. A Cash LTC plan still requires that the insured need long term care services, but then pays a pre-determined monthly cash benefit that can be used however the insured deems necessary. Unfortunately, cash LTCI plans have not been sold for a number of years and were also quite a bit more expensive at the time.
But what if you need long term care when you are working? Does disability help?
Yes and no. Yes, you will receive a benefit; however, it is only a portion of what your total income was before. If the disability coverage is provided by your employer then any income you receive is taxed just like your income. Could you live with a 30-40% pay cut? That is what it will be if you receive a disability benefit. One challenging aspect of long term care is that your monthly costs increase as you require home health care in addition to your normal monthly expenses and your income decreases when receiving a disability benefits. While Long Term Disability is great insurance to protect your income, it doesn’t help with covering the increased expense of needing care at home.
LTC Consumer is an independent, free online service to help consumers understand what long term care insurance is, how it works, and how to evaluate coverage options. Our mission is to provide an educational, no-pressure resource for learning about long term care planning, with the opportunity to speak with specialists who can help them.