Walls of Protection
By: Gary R. Polk, CLTC – Certified in Long-Term Care
Take a look at how the risk of needing long term care compares to other kinds of risks that threaten your retirement nest egg.
Here is a list of some of the assets you may have accumulated over the years. Your home, your cars, your investments, and your 401(k) or retirement savings – would you say these things make up the majority of your assets?
Look at one of the risks to those assets – the risk of something happening to your home. If your house burned down, would you have to use your retirement savings to replace it? Why not? Sure – your homeowners insurance would be in place to cover it. You’ve built a wall with insurance to protect one of your most important assets.
What about if you were on your way to breakfast one Saturday morning and someone ran a red light and totaled your car. Assuming you were okay, would you have to spend $20,000 or $30,000 of your assets to replace your car? Of course not – you’ve built another wall with auto insurance to protect your money.
What if you were actually injured in that wreck? Let’s say you hit your head and needed stitches. Would you have to tap into your assets to pay for the ambulance ride or the ER visit or the treatment you got? You might have a deductible and/or co-insurance, but all of the rest of the bills would be paid by your medical insurance. Sure - because you’ve built a third wall to protect your money from the risk of medical expenses.
Suppose for a moment that your injuries were more serious. Say your leg was broken in several places and you had a bad neck sprain, say you couldn’t bathe or dress yourself, and even the easiest tasks were a huge challenge for you. The hospital would essentially set your leg from ankle to hip, give you a neck brace, and wheel you to the door. Then what? Where would the money come from to pay someone to come out and continue to take care of you? Instead, what if you had a heart attack or stroke, developed MS or Parkinson’s, or needed a knee or hip replacement, or even developed dementia or Alzheimer’s. Where is the wall that protects your money from that kind of risk? Medical insurance and Medicare won’t pay. How long would you need care for and who would pay? Is that what you intended your savings and retirement funds to be used for?
The point here is that if you needed help caring for yourself for an extended period of time, you’d have to use at least some of the assets you’ve saved for retirement – wouldn’t you agree? What’s concerning is that the chances of your house catching fire are actually only about 1 in 1,200. Your odds of being in a car wreck are about 1 in 240, and your chances of needing temporary care following a serious accident are about 1 in 15. The chances of needing some form of long term care, on the other hand, are much greater. In fact, for men, the odds are about 1 in 3, and for women, they’re roughly 1 in 2.
Isn’t it pretty ironic that the biggest risk you face is the one most people are completely unprotected from? With your entire life savings on the line, doesn’t it make sense to see what could be done to protect you from this kind of risk? Why not build a wall to protect your financial assets and the burden to your family?
You should seriously consider Long-Term Care Insurance!