Even a well-developed investment plan can fail for reasons that have nothing to do with investments. It could fail because the family breadwinner dies prematurely and doesn’t have enough life insurance to cover her loved ones. Or it could fail because of an auto accident that results in a large judgment, and there’s insufficient liability insurance in the form of an umbrella policy.
This is why it’s critical to integrate an investment plan into an overall estate, tax, and risk management (insurance) plan. One area of concern that is all-too-often overlooked in the need for long-term care insurance (LTCI).
According to a survey by Sun Life Financial, there’s a major disconnect between people’s need for LTCI and the preparation for that need. While just 36 percent of those surveyed believed that they would need such insurnance, it’s estimated that at least 60 percent of people over age 65 will require some long-term care services at some point in their lives. The survey also found that 84 percent said they don’t feel financially prepared for LTCI.
And this is almost surely an understatement for two reasons. First, contrary to what many people believe, Medicare and private health insurance programs don’t pay for the majority of long-term care services that most people eventually need, such as help with personal care such as dressing or using the bathroom independently. Second, when asked to estimate how much costs would increase by 2030, the average estimate put the figure at 56 percent. Based on historical data, by contrast, the costs are estimated to rise 123 percent.