Fitting Long Term Care into Your Budget
For Sam and Peggy Barnes, long-term care insurance was just too expensive. They had met with agents from all of the major insurance companies, reviewed all of the policies, heard all of the sales pitches, and wound up not going any further. Confused and frustrated, Sam and Peggy decided not to purchase any coverage and just take their chances. After all, at $3,000 plus for a policy for both of them, it was an easy thing to forget about.
While Sam and Peggy knew the coverage was important, it always seemed to come back to the cost and the fact that they could not afford it. Sam had seen his parents go through their life savings and go on Medicaid when his dad had a series of strokes back in the late 80s. He did not want that to happen to their life savings, but what could he do?
In his meetings with all of the insurance agents, it all seemed to go the same way: sales pitch, explain the policy, quote, it is too expensive, end of appointment. Sam could see that the agents knew the ins and outs of the policies, were acting in his best interest, and were trying to come up with viable solutions to his insurance needs. But something was just not right. None of them really took the time to understand Sam and Peggy’s finances and how long-term care insurance could fit in.
After a financial planning consultation with Colin Meeks, a Certified Financial Planner, Sam and Peggy were much more informed and educated about their complete financial well-being. Sam and Peggy were in a “gray area” for purchasing long-term care insurance. They had too many assets to rely on Medicaid, but they were not wealthy enough to self-insure the risk. They were also spending all of their income on necessities, so there was little left over for other expenses. It turns out that they were in the same boat as many other retirees.
After reviewing all of their assets, Sam and Peggy were able to rearrange some of their investments into higher paying accounts. These accounts would then generate enough additional income to pay for a good long-term care insurance policy from a solid company. During the process, they realized that they were too spread out, had too many accounts, were paying unnecessary taxes and fees on their investments, and were taking substantially more risk than they were comfortable with. With some slight adjustments, they made some sensible changes. They were able to increase their income, reduce their taxes, and insure they never run out of money.
In the end, Sam and Peggy were very happy with the outcome. Sam compared the experience with going to the doctor: “A doctor wouldn’t just write you a prescription without doing a complete examination, would he? Our financial planner did the same thing – He did a complete examination, evaluated our options, and presented several solutions that really made sense.”