Protecting the Survivor A Shi in Planning Perspective When considering Long-Term Care planning, many people focus on the likelihood of their own potential future frailty and the possibility of needing care as a result. Many believe their own personal risk for needing Long-Term Care is low and therefore do not need to plan for a care event. They are comfortable “rolling the dice,” so to speak. After all, they feel the odds are in their favor, so “why waste money” on an insurance product they “may never need”?
Unfortunately this perspective largely misses the point. The challenges of an unforeseen care event are not born by the person who needs care - he or she will be cared for one way or another. Instead it is the spouse and family who are at risk. The individual may be right - he or she may never need care. But if care is needed, the consequences for the spouse and family can be significant financially, as well as emotionally, relationally, and physically.
The Planning Goal The goal of the planning process is to shift the perspective so that the focus is on the individual who is more likely at risk financially if Long-Term Care services are needed. Most often the spouse (or adult children), it is the care-giving partner who carries the burden of supporting the individual needing care and may be drained of financial resources.
Financial Costs to a Survivor The financial impact of a Long-Term Care need results when financial resources (often investment assets) are reduced or depleted to fund the care-giving needs of an individual. These expended resources are no longer available to produce income to support the income needs of the survivor (who may live for many more years).
Can We Support the Survivor’s Lifestyle? The lifestyle needs of the survivor should be the goal when designing an appropriate level of Long-Term Care Insurance coverage. The coverage should protect enough income- producing assets to support a survivor. Financial planning tools can be used to illustrate the impact of certain care events and their costs. Care should be exercised to accommodate for variables that may alter the accuracy of these illustrations such as varying investment market returns, inflationary trends, changes in income needs, escalating care costs, unforeseen expenses, and an early or late care event and/or death. A welldesigned Long-Term Care plan can accommodate for a variety of variables without risking the financial security of a surviving partner. The goal is to shift enough risk to create financial security desired by the surviving partner.
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Beyond Financial Risks In addition to protecting these incomeproducing assets, an insurance plan can help protect the partner from the potential exhaustion that comes from managing the care-giving needs of a spouse on their own. Love often propels partners and children to do more than might be healthy for themselves during a long-term care need. In fact, the life expectancy of a caregiving spouse drops by four to seven years1 on average due to the stress this role puts on them. Available insurance dollars often make it easier for loved ones to access help instead of carrying the full burden of caregiving. 1 Accelerated Telomere Erosion Is Associated with a Declining Immune Function of Caregivers of Alzheimer’s Disease Patients, J. Immunol., Sep 2007; 179: 4249 – 4254.