Betting on the Future

PRECAUTIONS: "As my generation gets older, we're seeing what a long-term care illness can do to the family," says agent Sande Kaskel.A decade ago, most people who bought long-term care insurance -- or had even heard of it -- were already retired and looking ahead to what life might be like when they were no longer able to handle their own basic chores.

Today, as Baby Boomers and Generation Xers watch their parents age, they're signing up for the insurance earlier, sometimes in their 30s. They don't want to rely on someone else to take care of them.

"More and more people are purchasing it to protect their loved ones," says Sande Kaskel, whose Hollywood insurance firm specializes in long-term care. "I always tell people, 'Look, if you're in a family situation, you don't have to worry. You know you'll be taken care of. But when you look to see what happens to family members, it's devastating, emotionally and physically.' "

Just as importantly, people purchase the insurance because they don't want to spend their entire retirement savings on a home health aide or a nursing home bed. They want to protect their assets and leave their money to their children or favorite charities, says Kaskel, president of Kaskel & Associates.

Signing up for long-term care insurance is typically easier than getting policies for healthcare or life insurance, she says. You usually undergo a telephone or face-to-face interview with a nurse, and the insurance company checks your medical history for the past five years to verify you're not already incapacitated. Then the insurance kicks in when you need it.

Kaskel, who has handled long-term care insurance for 16 years, says she's seen major changes recently:
With some insurance companies, you can now purchase a "return of premium" option that awards your estate any unclaimed portion of the insurance after you die.
Some business owners and corporations are buying the insurance as an employee benefit and writing off the premiums as an expense. Depending on how the business is structured, part or all of the premiums might be tax-deductible. The money received from a claim is not taxable.
People in their 30s through 50s are paying off the insurance policies in 10 years or just until they're 65 so they don't have the monthly expense after they retire.
Insurance companies are starting to offer flexibility in how they pay the benefits. Some give patients a monthly cash allotment instead of requiring them to pay their bills and submit paperwork for reimbursement. Other companies offer a combination of cash and reimbursement.
Some companies are starting to offer the benefits even if the patient leaves the country.
"The policies are becoming more flexible for the user," Kaskel says.

Shopping for Insurance

Think of not just how much you'd require if you became incapacitated today, but how much you might need in the distant future. If a nursing home stay costs $150 a day now and increases 5% to 7% every year, it could cost $200,000 a year by the time you're 80.
Find a specialist. Ask the insurance agent for a breakdown of what he or she does. An agent who handles all kinds of insurance might not be able to keep track of all the latest developments in the industry.
Work with an agent who has the flexibility to offer you policies from many companies. Policies vary on how you qualify for the insurance, when the policy kicks in, when you can use it and how long it covers you. An agent can find the right combination for you.
This is not the first insurance you should get. But after you've invested in life insurance, disability insurance and your children's college funds, it's time to look at long-term care.
Source: Sande Kaskel, Kaskel & Associates Inc.

Cost of Help
(Monthly average cost of care)Home health aide
(four hours a day, five days a week)Jacksonville$1,573Miami$1,232Orlando
$1,409U.S.$1,794Assisted living facility
Jacksonville$2,224Miami$2,329Orlando
$2,431U.S.$2,522Nursing home, semi-private room
Jacksonville$4,570Miami$5,264Orlando
$4,888U.S.$5,023
Source: Genworth Financial, Cost of Care Survey, May 2005

Tags: Healthcare