Closed-End Funds Raise Awareness

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Is short-term long-term care insurance a good idea for you?

REBECCA WARREN is a certified financial planner and certified senior adviser in Mesa. She can be reached at (480) 357-8380 or by e-mail at rebecca@ warrenfinancialservices.com.

As the long-term care (LTC) insurance market has matured over the past 20 years, features have been added to the costly policies to make them more attractive. Even the IRS has even come on board, making a portion of the premiums tax-deductible. Yet with the tougher economy, insurers are looking for ways to get more consumers in the door --= so they’re adjusting features to give people a break on cost.=

Enter the “shorter-term” long-term care policy for individuals who are willing to play the odds. The main change in such policies is that they eliminate the “lifetimeR= 21; feature in favor of a shorter time limit on benefits, usually between two a= nd three years, currently the length of an average nursing home stay. These sh= orter-term plans can potentially cut the cost of average annual premiums in half, and = if couples buy a combined policy, they potentially may cut the premium cost further.

The idea of lower-cost LTC insurance is certainly attractive, but it makes sense to get some advice and ask some ve= ry important questions before committing. You’ll need to assess how well prepared your finances are to sustain a serious long-term illness with a current national average of $70,000 in annual nursing home bills that would= not otherwise be covered by insurance. In addition, ask:

What’s = your health like? People in good health purchasing long-term care insuran= ce in their 50s or younger usually get the most affordable deal in LTC insuran= ce. But to some degree, your current health status is no guarantee that you’ll only be looking at 2-3 years of expenses in total. Keep in mind that 40 percent of long-term care is provided to individuals between the ag= es of 19 and 65, so the need for care can strike at any time and may do so mor= e than once.

Are you femal= e? Again, perso= nal and family resources come into play here, but since women typically live lo= nger than men -- and they still earn less on average than men -- women should ta= ke a heightened interest in providing for their long-term care safety net. Long-term care insurance might be = a good solution given their other investments and their health history.

What if I nev= er want to go to a nursing home? <= /span>The idea is to cover every eventuality. The best-designed LTC policies will pay the same amount of benefit whether care is received in a long-term care facility, an assisted living facility, an adult day care center or in the home. Some policies do offer reduced percentages for home health care versus nursing home care, but it’s a better idea to keep full percentages on home health care benefits since most people would rather stay in their homes.&n= bsp;

What’s = the record of particular companies in this business? Over the past generation, more companies have gotten involved in the LTC insurance busine= ss, and it makes sense to see not only who the leaders are at the time you̵= 7;re buying and what they’re offering, but how financially healthy these companies are and have been over the course of time. You’ve probably heard of insurance companies that have gone out of business and stranded customers. There’s no restriction on that happening with LTC provider= s, so check their ratings and financial history very carefully.

= Don't hesitat= e to get expert help if you think you might benefit from harvesting losses for t= ax purposes. And don’t for= get to ask your tax or financial planner about other year-end tax planning strateg= ies that may benefit you as well.

REBECCA WARREN
FOR THE TRIBUNE