A recent article in The Wall Street Journal, “Million Insurance Buy To Cover The Health Cost Of Retirement, Now They Are Facing A Bad Choice,” has been circulated on the Internet but for all the wrong reasons. The Wall Street Journal coverage is basically a story of “selling bad news.” Although the article itself provides a wealth of statistics and touches on a very important topic, the article really overlooks this on two points about long-term care insurance. Its “curse!” Theme actually motivates people away from high-quality long-term care plans. Instead of lamenting past mistakes, this article should emphasize new technologies that will create an effective and sustainable solution to the long-term crisis of care that emerges.
Let’s start with the error in the article. Unfortunately, we have to start with the title of the article. This title is a misunderstanding of this issue because it treats insurance as a way of covering the cost of health care rather than the intended purpose of long-term care insurance. Long-term care insurance is not designed to cover health care costs. It is designed to cover regulatory health and define it more accurately as a basic daily function, such as the help needed for diet and dressing. Second, a large number of references in the article also reflect the same theme of apologetics: When long-term care insurance holders often have a high premium to increase, they face a sobering choice – either paying higher prices or simply abandoning their policies. This is wrong. In fact, most long-term care insurance policies can be modified to change benefits or riders to reduce costs. For example, you can reduce the inflation of passengers or shorten the period of benefits in order to maintain revenue, but lower premiums. Therefore, giving up a policy or paying a higher premium is not the only option for policyholders.
This article also sent a bad news, because it actually hinder the long-term care plan. The article concludes with a recommendation to oppose the purchase of any long-term care insurance. Instead, the article takes the opportunity to explain how the financial planning world has evolved to better provide long-term care protection and has numerous planning options available today.
The Wall Street Journal article does illustrate the emotional and financial impact that insurers routinely raise long-term care premiums. This is a really important point, because the real people are affected. In fact, insurers do a poor job of pricing long-term care insurance. But this is not new, as the increase in premiums and the error in insurance calculations have existed for many years. Error estimation mainly comes from two aspects. First, it goes well beyond the policies that insurance companies expect. This means that insurers are paying more than expected. Second, few see or predict a low-interest rate environment over the past decade. The rise in premiums is almost entirely driven by both mistakes.
The reality is that no one likes paying insurance for rising insurance premiums. This is detrimental and destructive to current long-term care insurance holders. But the reality is that premiums are on the rise, because policies are inherently good, taking into account the costs people are paying. If your premiums increase, you have not made a bad decision, long-term care insurance; you did make a good decision because you got important protection at a low price. This means that you still need to be able to continue to cover your insurance in the future.
If you are the person who has affected the land price increase, you are not helpless, you have more options than the WSJ article suggests. In fact, according to Bill Borton, managing director at WR Borton Associates, there are things that can lower premiums. Traditional long-term care insurance policy can be modified. You can control premium costs by reducing inflation passengers or adjusting other features. Mr Bolton still believes that if you have a policy that has experienced a rate hike, you should continue to maintain effective policies if you can afford it. These current long-term care insurance policies, which were sold years ago, are more generous than anything you can buy today.
It is also important to note that creating a long-term care financing solution is not limited to buying long-term care insurance. There are basically three options when planning long-term care costs. Self-financing, buying insurance, or relying on Medicaid. Most people do not want to rely on Medicaid, because it requires you to spend your assets first, giving up control of your care. However, many people rely on Medicare to cover long-term care costs as their reality because they can not raise money or buy insurance.
While some people decide to own their own retirement savings, insurance products remain a viable funding option. Today, more products are more than just traditional long-term care insurance. In order to mitigate some of the risks associated with traditional policies, mixed products have been developed, such as those unwelcome and unexpected increases in premiums. There are basically several different forms of hybrid policy, but often long-term care preferences related to life insurance or annuity products. These hybrid approaches allow one-time payments and one-time payments, eliminating the possibility of a complete upgrade. In addition, these policies can eliminate the “use or loss” aspects of traditional policies. With mixed long-term care and life insurance policies, your heirs can still get the death benefit if you ultimately do not need the benefits of long-term care. This allows one to purchase one product that has two potential benefits, as well as provide funding and life insurance for long term care if needed. (Take a look at this article about long term care plans.)
Long-term care costs can exceed $ 100,000 a year, so having the right source of funding is crucial. Although there are problems with current policies, long-term care insurance or hybrid product financing solutions should not be discontinued. In fact, the situation is the opposite. It is more important than ever to consider buying long-term care financing tools. In fact, with the growth of hybrid products, there is more choice to supplement the traditional long-term care insurance market. So, I urge you to explore the options available for long-term care funds. If you have an existing policy, look for ways to reduce costs. For those who consider the purchase policy, be sure to check out the hybrids. But above all, do not run away from long-term care programs because of negative news articles. This approach simply can not improve your financial security in the future, and you may end up being the one who said “woe is me.”