Millions of middle-aged Americans worry about parents in their 50s and 60s who lack long term care insurance (LTCi).
Should they buy policies for their unprotected parents, and if so, how should they go about it?
My friend, Paula Taylor, an LTCI specialist in the California division of LTC Financial Partners L.L.C., has come up with a four-step process that may be helpful for financial professionals who are talking to clients about this question.
One important point: Financial professionals should encourage clients to think about the topic as early as possible. If clients wait until their parents have health problems, that's too late. If clients wait until their parents actually need long-term care (LTC) services, that's far too late.
To actually get coverage, the parents need to apply when they're still able to qualify for coverage.
1. Confirm that long-term care insurance is the best solution.
If the adult child client is going to get involved in this matter, buying LTCi coverage should serve the client's needs as well as the parents.
A financial professional should help the client determine if LTCi is a better LTC financing tool than the alternatives.
The professional should ask the client questions such as:
- Are you prepared for one or more parents to move in with you? Or is a brother or sister to have one or more parents move in?
- In the absence of LTCi coverage, who in your family would be the default caregiver? Is someone available and willing to help with eating, dressing, toileting?
- Are you wealthy enough to pay for care out of savings, or would that jeopardize your own retirement?
For some clients, using tools such as annuities, mutual funds or ordinary savings accounts might be a good option. Other clients might look at the downsides associated with those tools, such as market risk and low interest rates, and decide that an LTCi policy is the best option.
2. Help the client thoroughly research the LTCi options before the client approaches the parent, or refer the client to an LTCi specialist who can help with that task.
The adult client needs to have a plan that the client sees as being appropriate and comfortably affordable.
3. Suggest that the client get buy-in from siblings.
Clients should consult all siblings, either at a family gathering or over the phone, before approaching their parents. The concerns of all siblings should be addressed. So should any questions about who would pay for the coverage.
Some siblings might be in a position to help with the premiums, and some may not.
Some might be in a position to help with the costs that would not be covered by the LTCi policy.
4. Once the client has a solid, well-vetted plan, the client should present the plan to the parent, or parents.
A client should understand that the parent might not react favorably. Some parents might resist the idea of spending the money on insurance, or the idea that they would ever use LTC services.
Once a parent says "yes," then it's time to apply for a policy.