Long-term care (LTC) is a huge issue facing clients today, and it is particularly important that women understand the risk they face in having LTC become part of their life -- as a caregiver, the cared-for, or both. This risk can take a physical, mental and financial toll on women who are thrust into the role of caretaker, as well as have a catastrophic financial impact on women needing LTC services. Families need to be aware of what they will face if they do not plan ahead for this risk, both emotional and financially.
Women as caretakers
Nearly 50% of Americans will need long-term care at some point in their life1 and women are often the ones to provide some of that care. It is estimated that 75% of unpaid caretakers in the U.S. are women, and if a spouse is not available, the caretaker usually becomes the daughter or daughter-in-law.2 Female caretakers are most likely to be middle-aged and employed,3 and the sacrifice to their health and finances does not come cheap. A survey by AARP reports more than 60% of female caregivers made career sacrifices that included cutting work hours, passing up promotions, or quitting their job entirely to accommodate their care giving responsibilities.4 In addition:
- Women who provide care for a disabled or ill spouse are six times more likely to suffer symptoms of depression.5
- Women who spend more than nine hours per week caring for a disabled or ill spouse have double the risk of coronary heart disease.5
- Women may lose out financially as well when balancing work with care-giving. Losses average $565,000 in lifetime earnings, plus loss of Social Security and pension benefits.5
- Female caregivers are more likely to suffer emotional stress, exhaustion, anger and anxiety, depression, reduced immunities, increased substance abuse, and poor physical health, resulting in higher mortality rates than non- caregivers.6
Unfortunately, parents may assume that their children will take care of them and that it will work out just fine. But when looking at the statistics, it's clear that caretaking takes its toll on the family member providing the care.
Women as the cared-for
Women also face challenges as the one left behind and most likely to need care. For women age 75 or older, there is about a 70% chance she will be widowed, divorced, or never married while only 30% of men are alone for those reasons7. This not only leaves a woman without a spouse to care for her, but may leave her more dependent on family members both financially and to provide care.
- Women outlive men by an average of five years and have 10 times the chance of reaching age 85 than a man7.
- Women represent 75% of residents in assisted living communities and 80% of nursing home
- Financial resources are more limited for women living alone with a median income of less than half the median household incomes of married couples.7
Questions to ask your client
Most people would like to stay in their homes as long as possible or at least receive care in a community-based service not involving a nursing home4 but it takes planning and resources in order to have choices. Too many families wait until the eleventh hour to have discussions about a parent's long-term care, and by then, many choices that may have been available in the past are gone.
It may help if you have the discussion with your client first, so they can be made aware of what they are facing. The following questions may help your client open their eyes to the issues:
- Have you thought about how you would pay for help in your home or other type of care if ever needed?
- Are you aware that health insurance doesn't cover LTC, and Medicare just covers the first 100 days of care, and only after a three-day consecutive stay in a hospital?
- Are you aware that Medicaid only kicks in after you are broke, and does not provide the choices for care you may have in mind?
- If your client says their children will care for them, ask the following:
- Are your children aware of your intention?
- Do you have a child that can afford to quit work or substantially cut work hours?
- Are you aware that your children are probably ill-prepared to give you real quality care?
- Where do your children live? Would you be willing to leave the community and friends you are accustomed to?
Solutions for your client
Traditional long-term care insurance (LTCI) policies, familiar to most clients, focus on long-term care only. While these policies offer an array features, they may be difficult to explain, have risk of increased premium and are a "use it or lose it" proposition, which leaves many consumers cold.
Long-term care riders on life insurance and annuities offer an alternative linked solution:
- Annuities/LTC combos vary among companies, but essentially double or triple guaranteed income benefits from assets that have accrued if qualifying LTC needs occur. These products may be a good choice for clients who must stretch what they have to last a lifetime and will pay either income or a LTC benefit.
- Life insurance/LTC combos allow the client to leverage funds immediately into a larger pool of money using life insurance. This solution is better suited to clients who have enough income to live on, but are looking for a LTC solution that can fit in with legacy planning. The death benefit becomes available while the client is living to pay qualifying LTC expenses, and any unused death benefit is paid to the beneficiary.
Benefit payout options
You will also want to provide your client with information on benefit options, an important consideration when thinking about the stress and time required from family members to coordinate collection of a parent's benefit.
Reimbursement plans can be less expensive to purchase, but require more work. The benefit will be the lesser of the maximum qualifying benefit or actual LTC costs incurred, and only covers costs specific to long-term care. In addition, bills and receipts must be submitted each month to the company. Qualifying costs are then reimbursed, either to the facility or to the contract owner for bills already paid.
Indemnity plans, while sometimes more expensive, provide a much simpler policy to collect on. This option will provide a check each month for the full amount the client qualifies for, whether they need it all or not. No bills or receipts need to be submitted and any excess benefits may be used for any other expenses, offering more flexibility of use.
Planning for long-term care needs is important to all family members. While husbands and sons will also benefit, thorough discussion and proper LTC planning will benefit women in particular. When funds are available to provide professional care, the patient gets better quality care, and the wife or daughter, most likely to start out in a care taking role of some sort, are better able to maintain their own physical and financial health and live a longer, more quality life.
Shawn Britt, CLU, is director of advanced sales with Nationwide Financial Services in Columbus, Ohio. She may be reached at email@example.com.
1. http://www.longtermcareinsurancetree.com, June 30, 2010
2. Journal of Women's Health - Volume 7, April 2009
3. Family Caregiver Alliance 2009, http://www.caregiver.org
4. AARP - "Why Women, Why Now," October 2009
5. Aging into the 21st Century, National Aging Information Center and the Administration on Aging, 2009
6. Family Caregiver Alliance 2009, http://www.caregiver.org
7. American Association for Long-term Care Insurance (AALTCI) 2010