Tuesday, December 15, 2015

Long Term Care Plan v. Long Term Care Insurance (Part 1)

As I outlined in an earlier post, I disagree with Dave Ramsey  (and a lot of other people) when it comes to long term care insurance.  Many people debate with their family, with "experts" and/or with themselves regarding whether or not to buy long term care insurance.  However, I rarely hear anyone talk about a long term care PLAN, unless they are using it as a synonym for LTC insurance.  Having no plan is a bad plan, no matter how good of insurance that someone might have, and some times having no insurance is the right plan.

So what's the difference between LTC insurance and a LTC plan?  Maybe it will help to plug in "fire" for LTC to understand it better.

If your house is burning down, the most important thing is to have a plan of action, so everyone gets out safely.  If everyone's dead, there's not point in having the insurance to replace your stuff that burns up.  Even better than an escape plan, is a fire prevention plan.  Almost all fires are preventable.  If you never have a fire, your never hurt by not having fire insurance or having bad insurance.  Also, once a fire starts, a good plan and things like fire extinguishers can minimize the damage, again making much less important to have good fire insurance.

Having a long term care PLAN starts with prevention.  Many of the things that result in someone needing long term care are preventable.  Most physical problems that result in people being unable to live on their own are caused by poor lifestyle choices.  Heart attacks, strokes, broken hips, lung problems, etc. are mostly preventable.  Making healthy choices dramatically reduces the odds of needing long term care.  Insurance companies know that, so if you decide to buy LTC insurance, it will cost a lot less and be easier to get if you are healthy.

The next part of making a plan is to assess your current status and figure out what would happen if right now you were suddenly unable to care for yourself with little or no chance of recovery.  What would happen?  I always recommend taking a lot of time writing out the answer to this question.  It's going to vary a lot from one person to another.  For example, if a person were a grain farmer, someone would have to take over planting, harvesting, etc. pretty much immediately, but if someone is retired or one of many people performing the same basic job as several others within a company, the situation isn't as urgent.  It would also look different for someone running a company where others were dependent on him or her for their employment.  Family situations are another variable affecting things dramatically.

If you haven't already, now is the time to really think about this possibility, and get it down in black and white what you think would happen.  That is the foundation of a long term care plan.  We'll work on putting the rest of the building up soon.

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