Here is a little nugget that is often overshadowed with false optimism. It comes in a few different forms but ultimately boils down to people thinking that it will not happen to them. Regardless of the reason – people believe that they are exempt from a long-term care situation.
Worse yet is the cluster of advisors who believe that “long-term care insurance isn’t a good investment of your money” or the “you have more than enough money to pay for whatever you need” or some other reason (any other reason) to avoid the long-term care planning and funding conversation.
The result of that is that the clients end up bearing the full risk of a long-term care event. In other words, they are going to SELF-FUND long-term care as long as they can afford to, run out of money, then have to crisis manage their way to the end.
If someone is going to recommend a self-funding (NOT SELF-INSURING) strategy in lieu of the leverage of insurance, I would hope that they are responsible enough to explain the importance of allocating a respectable portion of money into a dedicated conservative fund specifically earmarked for use for a long-term care need.
My perspective is simply this – if you are not going to use the leverage of insurance, at least, set yourself up to have an adequate pool dedicated to that specific need.
Consider this – I can create a million dollar pool of resources specifically for the day that an LTC event occurs by simply repositioning a few hundred thousand dollars (as a one-time transaction or over a period of time). Isn’t that more reasonable than building a pool of $1 million and hoping that the market performs favorably?
I think so … but that’s just me.
Give me a shout to learn more about what money we can use to provide a leveraged funding solution.
Fridays with Fisher 