Long-Term Care Insurance: Waste or Wise Move?

Tim Berry wishes he had discussed long-term care insurance with his parents.

When Tim’s dad had open heart surgery, the family was told there was only a 3% chance of anything going wrong.

But in the days following the procedure, Mr. Berry suffered a stroke. “His mind was wiped out,” Tim told the Asset Protection Society (www.assetprotectionsociety.org). 

“Literally wiped out. He no longer remembered the year, his wife’s name, that he had children, or even his dog’s name.”

When the hospital discharged Mr. Berry, Tim did his best to help his stepmother make the transition as smooth as possible. 

But a month after surgery, Tim’s father couldn’t move from his bed to a chair next to his bed without help. The family had to hire a home health care provider service.

The Berrys were told they’d be charged “$30/hour for the normal help, and $90/hour if we needed a nurse. (Nurses are required for tube-fed patients like my father). The bill for a week’s worth of services was $1,980. You can do the simple math: That is over $100K a year. What a screwed-up situation. You want to provide the best for your family, yet you have to factor in the money situation as well.”

In the midst of this all-too-common tragedy, Tim learned three lessons:

1. Buy long-term care insurance. “For the longest time I pretty much thought long-term care insurance was a scam,” Tim says. “I am now a true believer and will preach its benefits to anybody who asks. Don’t think about it, go out and purchase a policy.”

2. Make sure the insurance company has good customer service. Tim requested a copy of the actual contract to review. The company told him it would take up to seven weeks to get it! Not much help when time is short. Make sure your company (or agent) will be there when that time comes.

3. Get your estate in order. Tim’s father was no financial neophyte. After a career as a Navy pilot, he was a commodities broker. 

“So, picture this if you will,” Tim says. “A man knows he is going to have open heart surgery. He knows of the legal implications of having assets in America. He knows there are tax implications to being married to a non-US Citizen. (His wife is Norwegian). He had also just sold some family land via an installment note for over seven figures. Guess what steps he/they had taken to plan his estate? He had a sixteen-year-old will, and my stepmother…didn’t even have a will. Apparently, they had gone to a local attorney to have some documents drawn up, but they never got around to getting back to the attorney.”

Tim’s experience also highlights the need for properly drafted powers of attorney. Make sure all the applicable banks and brokerage firms have approved your POA forms, as having them rejected on a technicality is the last thing you need during a time like this.

“I used to always joke with insurance agents about the corny line of a life insurance policy being ‘the greatest love letter you could ever write your family,’” Tim says. “Now that I’ve gone through this experience, I truly believe a long-term care policy, as well as properly setting up your estate, are the greatest love letters you can write your family.”

Remember to use experienced and licensed agents when dealing with insurance and attorneys when dealing with legal matters.

“Don’t push tough decisions upon your family when they are going through emotional turmoil, give them clear-cut guidance and direction as to exactly what your wishes are,” Tim advises.

He adds this P.S. “My father has been home for a little over a week…we have attendants eight hours a day.”

Stories like Tim’s never fail to spark important financial conversations. Make sure you’re asking all the right questions. Email me at bmoore@argentadvisors.com and I’ll send you my free list of “30-Something Questions for People Who are 60-Something.”

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

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