Conventional wisdom
Buy low, sell high. Always protect principle. Isn’t that the strategy?
A downturn in the market is a temporary thing. Better to think long term than to panic and sell stock at a low during a downturn.
In a downturn the assets providing retirement income and the resources to self-fund a long-term care event may evaporate. And it may take time, perhaps years, to achieve that level of wealth again.
I’ve long thought that long-term care insurance (LTCI) is viewed by many consumers as a discretionary expense. Perhaps akin to engaging a new service that you’ve been doing yourself and figure you can afford to pay an expert to do it for you.
It’s interesting to me that consumers don’t question paying for auto insurance or homeowners’ insurance. Yes, those are mandated. As is health insurance. After all few of us can repair a car or rebuild a house. Or order tests, diagnose or prescribe.
But many have a different view when it comes to long-term care insurance. Perhaps they think care is a service they can provide if necessary. Unless, of course, they are somehow single. Then this insurance is right up there with health insurance. Providing one’s own care doesn’t work very well with dementia or a disability.
Better to have and not need than need and not have
“But I may never need it,” is a lament I hear frequently. It’s insurance. The goal is never to need it. Just like you don’t want to have to rebuild if your house burns to the ground. But if you need it, you have a plan to afford the expense and pay for experts.
Let’s put some perspective on cost.
Check out the Kelley Blue Book value of your vehicle(s)? Divide the cost of your auto insurance annual premium by the dollar value of your vehicles.
Now do the same for LTCI. For this example, use $3000 per year per person for a LTCI premium. Divide $3000 by the value of your assets.
Compare the two ratios. I’ll wager the ratios are not even close. Probably something like10% for auto insurance compared to .003% for LTCI.
What’s the goal?
What’s your situation right now? Given the state of world health and the economy, physical health and financial stability most likely top the list. We all want to come out of this experience whole with our physical and financial health intact.
We’ve been helping clients plan for long-term care expenses for a long time. We’ve seen the ups and downs in the industry and the dramatic shift to hybrid products. We’re now experiencing a gradual shift back to the standalone products.
The product design really doesn’t matter. Standalone will serve some better. A life insurance-based design will appeal to others. And for others the annuity design will be the prudent solution.
It may seem counterintuitive to buy LTCI when the market is volatile and assets and income are uncertain. But it really is the ideal time to plan for long-term care expenses and protect assets and income. Among the benefits of insurance is peace of mind.
You want your financial plan to result in the goals you’ve established. Insuring you have a plan to fund long-term care is a critical component of financial planning. More so than ever today.
The world is changing. Get ahead of the curve.