Protecting your children as you age

Most of us will spend twenty years or more being responsible for our children and taking care of their needs. Eventually, they will be out on their own and have their own families to take care of. Our population is getting older. Our life expectancies are increasing. Therefore, the chances of us living to an age, where we will need help taking care of ourselves, is also increasing. The burden of this expense can be significant and could completely wipe out one’s retirement savings.

The question becomes how can I protect my savings and not become a financial burden to my children. The answer is a form of insurance called long term care insurance. The policies are only offered by a few companies and you should investigate to see which offers the plan that best fits your needs and pocketbook. The companies that offer policies that are worth investigating include: Genworth, Mass Mutual, Transamerica, Mutual of Omaha, John Hancock and a few others. AARP also offers a policy through Genworth.

Some of the things to watch for, which affect the cost of the policy and its benefits are: the waiting period between when you are qualified to receive the benefits and when the benefits actually kick in, the length of time the benefits cover, the number of symptoms you must exhibit to be eligible for benefits, which facilities or types of in home care are covered, can you receive benefits temporarily and then go off benefits until they are needed again and of course the cost. Additionally, some plans which insure both you and your spouse, allow the benefits to be shared between the two of you. Others however don’t. For example, if your plan allows for 5 years of benefits for each of you then some plans will allow one spouse to use 8years of benefit while the other uses only 2 years.

Most policies cease requiring premium payments once you are receiving benefits. Also, depending on where you live there are tax implications for the premiums. For example, New York State allows you to use part of your premium as a deduction when you file your New York state income tax. For specifics about possible tax savings you should contact a tax professional.

Recently, my 92 year old mother needed to move into an assisted living facility. Fortunately, she had long term care insurance from John Hancock which is paying approximately $73,000.00 a year for five years to cover the costs. Simple arithmetic tells me that if she were to use up the full five years of benefits she would have saved $365,000.00. This is a price tag, if she had not had insurance which would have come from her savings . Let’s not forget to mention the significant amount of money she would have lost on the interest to her savings.

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