SmartMoney Monday: Long-term care insurance

Smart Money Monday: Long-Term Care Insurance

Steve: It's SmartMoney Monday, and we're wrapping up our series on long-term care insurance. If you've missed last week's segment, you can get caught up on our website. Today, I'm here with Chris Otto, from Bankoh Investment Services, Inc., a non-bank subsidiary of Bank of Hawaii, talking about how to pay for long-term care insurance.

Steve: Chris, first, what are some types of long-term care insurance policies?

Chris: Steve, this is a great first step because knowing about the various options available to you will help narrow down your choices. You want to think through the best type of policy with your insurance broker. Some of them are:
•    Individual plans—most people buy long-term care policies through an insurance agent or financial advisor. These types of plans are highly customizable and can be tailored to meet one's specific needs and goals.
•    Employer-sponsored plans—some employers offer group long-term care policies or make individual policies available at discounted group rates. A number of group plans don't require medical underwriting, which means you may not have to meet medical requirements to qualify, at least initially.
•    Plans offered by organizations—just as with employer-sponsored coverage, study your options so you'll know what would happen if coverage were terminated or if you were to leave the organization.

Steve: How can someone get an idea of costs for long-term care insurance?

Chris: Well, as one can imagine, there's a lot to decide.

First, you need to think through the most appropriate level of care, the type of facility that would work best for you, as well as the impact to your family. If you want to get a better idea on average costs for the state of Hawaii, you can find that info on It's a website that provides costs on a variety of facilities, from nursing homes to adult care facilities, and can be used as a financial planning tool.

Steve: What other considerations might someone weigh when purchasing long-term care insurance?

Chris: Many individuals actually don't investment in a long-term care insurance policy because they view it a lot like car insurance - in the sense that if you don't get in a car accident you just paid all these premiums for nothing. Simply put – Traditional LTC insurance has a use-it-or-lose it value proposition.

But, Traditional Long-term care insurance is not the only option available nowadays. Some life insurance or annuity policies also offer long-term care benefits.  These policies combine the benefits of either life insurance or fixed annuities with the option to use some or all of the contract value to pay for long-term care expenses. So if you don't use the long-term care feature, you'll have either a death benefit payable to your beneficiaries or an annuity that you can use to supplement your income. 
There's no right or wrong option, but rather what's right for you and your situation.

Steve: All great information. Do you have any final tips for viewers on long-term care?

Chris: It's a fact that planning ahead has real benefits for you and your family.

Unfortunately, less than 1/3 of Americans who are 50 and older have begun savings for long-term care. But more than 70% of Americans 65 and older can expect to use some sort of long-term care in their lives. So plan ahead and make this a part of your financial goals.

Steve: Chris, thank you for all the great tips. Join us next week for an all-new topic on SmartMoney Monday. For Chris, I'm Steve Uyehara. Thank you for watching.

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