3.5 Reasons Why I Purchased Long-Term Care Insurance at 27
During my time as a producer at a major insurance company, before I became a wealth advisor with Buckingham, I quickly learned that most people would rather discuss death than incapacitation. In the minds of many people, the thought of lying in a casket is more palatable than the idea of withering away in a nursing home. Some clients would even joke that, should they begin losing their ability to reason, they would prefer to be “taken out behind the barn and shot” (a strong sentiment, I know).
In all seriousness, incapacitation is a very difficult and sobering subject to broach, and I certainly don’t intend to make light of this topic. If, as I mentioned, most people would rather discuss death than incapacitation, it also stands to reason that most people would rather chew glass than discuss long-term care insurance. It is, however, still a necessary conversation to have, and perhaps this article might serve as a starting point. To that end, my goal today isn’t to cover all facets of this particular insurance product, but simply to underscore my motivation for purchasing long-term care insurance at what many would consider a tender and “non-traditional” age. Here are the primary reasons:
1. It could happen to me: The last time I looked in a mirror, I wasn’t Superman (although, in my mind, I bear a striking resemblance). What I mean is that long-term care expenses aren’t only reserved for the elderly. At any age, I could become disabled from a disease or an accident, resulting in potentially financially devastating long-term care expenses.
2. I may not qualify later: Many times I’ve been asked what the right age is to purchase long-term care insurance, and my answer is generally: “When you can.” That is, I don’t believe in a “magic” age, such as 50 or 60, at which to purchase long-term care insurance. If you are 40 years old and can’t afford the coverage due to other financial commitments, then clearly this isn’t the right time for you. If you are 65 years old and can’t qualify for coverage because of health problems, then you aren’t at the right age, either. More than 20 percent of applicants ages 60-69 are rejected, and the rejection rate is more than 40 percent for people ages 70-79.
Health and financial viability are the key issues at stake: If you are healthy and believe that you are on track to meet your financial goals (such as your target retirement savings), then perhaps you should consider purchasing long-term care insurance. I should also mention that if you haven’t yet addressed the risk of premature death by purchasing life insurance (especially if you have dependents), or the risk of losing your income due to an illness or accident by purchasing disability insurance, then you have absolutely no business considering long-term care insurance until these risks have been mitigated.
3. I’m probably going to use it: According to Northwestern Mutual, one of the nation’s largest long-term care insurers, 70 percent of people turning 65 can expect to use some form of long-term care during their lifetime. Statistically speaking, between my wife and me, I fully expect that one of us will require long-term care at some point in the future. What’s more, Northwestern Mutual also estimates that nearly four in 10 Americans consider themselves a caregiver or say they have performed this role in the past. So, my reasons for purchasing long-term care insurance have as much to do with sparing my dear wife or children the burden of caring for me as they do with preserving and protecting my assets.
At the end of the day, I hope I’ve persuaded some people to look at this planning topic from another angle, rather than automatically adopting the conventional thinking that long-term care insurance shouldn’t even be considered until one reaches their 50s or 60s. There are some very valid reasons for why this insurance product shouldn’t be contemplated until other financial obligations have been met. But, on the other hand, if you are in a position to do so, then you might find great peace of mind, as I have, in purchasing this coverage at a non-traditional age and locking in a low rate.
Oh, one more thing. You may have been wondering about the half-reason mentioned in the title. OK, you got me – maybe long ago in my former profession the allure of boosting my sales figures by purchasing a product from myself played a small role. So perhaps this article should actually be entitled “3.5 Reasons Why I Purchased (and Kept) Long-Term Care Insurance at 27.”
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