When financial professionals talk about living benefits, we’re usually talking about product options. But often, these products also can provide the very real—if less tangible—benefits of peace of mind and security in knowing that a retirement strategy is solid.
These benefits start with planning, an area we know is lacking. A recent survey asked 2,017 U.S. adults age 18 and over whether they’d expect a family member or close friend to oversee or provide assistance with care if they needed it for an extended period of time (more than 90 days).
More than two-thirds of Americans (71 percent) say if they had an illness or injury that required care assistance for an extended period of time (long term care), they would expect a family member or close friend to oversee and/or provide that care. However, only 50 percent say they’ve had a conversation with family members or close friends about who will provide or oversee their long term care in the event they needed it.
Only six percent of Americans say they’ve had this conversation with a financial professional. Most likely, it’s because financial professionals aren’t starting these conversations, even though they have a unique perspective on helping families prepare financially for this possibility.
Having conversations with clients about whom they expect will help take care of them as they age opens the door to important questions. Does the person know about the expectations? Do they have a career or other family members they’re caring for? What kind of legal and financial preparations might be necessary to help the caregiver provide the kind of care your client wants, in the place they want to receive it?
Once you’ve started the conversation about care, clients will likely realize the need to prepare financially. Solutions offering living benefits—solutions like asset-based long term care (ABLTC) protection—can help protect retirement income from the drain of unexpected expenses while providing a death benefit if long term care benefits aren’t fully used. With ABLTC protection premiums are guaranteed, and may include protection of two people with one policy and the option for lifetime benefits.
One of the benefits of ABLTC is its flexibility. The benefits can allow people to choose how and where they want to receive care. Long term care protection can help them avoid spending down personal assets to pay for their long term care. With a lifetime benefit option they can’t outlive the benefits.
Some life insurance-based long term care solutions can also cover both spouses under one single policy. This shared benefit typically can cost less and provide more protection than purchasing two individual policies and offers flexibility. Some extension of benefits options allow a surviving spouse long term care benefits even if the original death benefit is exhausted. If a need for long term care arises for both spouses simultaneously, each is eligible for their own monthly benefit limit. This means the full long term care benefit is still available, but for a shorter period of time.
Going Beyond the Averages
Many financial professionals are aware that, on average, people need two to four years of long term care. Many of their clients can manage this expense; however, the average numbers don’t cover the catastrophic financial gap that can result if care is needed for longer—in some cases, much longer. Often, the burden of that financial and care provision gap can rest, at least partially, with family caregivers. But most people don’t plan for the emotional and physical toll providing care is likely to take on family members who provide care.
For people with Alzheimer’s and other dementias alone, in 2018, 16.3 million family members and friends provided 18.5 billion hours of unpaid care. Nearly one-fourth of caregivers of people with Alzheimer’s and other dementias are “sandwich generation” caregivers — caring for aging relatives with the disease while also supporting their children and/or grandchildren.
Among caregivers of those with Alzheimer’s or other dementias who are employed, 18 percent had to go from working full time to part time; 16 percent had to take a leave of absence; and eight percent turned down a promotion due to the burden of caregiving. More than one in six Alzheimer’s and dementia caregivers say they had to quit work entirely either to become a caregiver in the first place or because their caregiving duties became too burdensome.
Numbers like this demonstrate that care provided by family members isn’t free, as there is absolutely a cost to anyone trying to provide care on their own. Long term care insurance wasn’t designed to replace what families do for their loved ones in need of care; It’s designed to provide a network of benefits that can help them provide care better and longer than they might be able to on their own.
Long term care protection can allow a person needing care to access their benefits for care the family member isn’t licensed to provide—skilled nursing visits for instance. Long term care benefits can also help hire someone to fill in during vacations or to do tasks the family member can’t. Basically, long term care protection can allow a person receiving care to do so with dignity, and allow the family member to care about their loved one versus provide care for them.
Planning for any possibility is its own living benefit. Helping clients achieve peace of mind that the retirement income they’ve prepared for will be used for its intended purpose—retirement—is a wonderful benefit that any of us in the financial services industry can give.
- This survey was conducted online within the United States by The Harris Poll on behalf of OneAmerica from December 12-16, 2019, among 2,017 U.S. adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Tammy Lieber at firstname.lastname@example.org.
- Alzheimer’s Disease Caregivers, Alzheimer’s Association, March 2019, accessed at https://act.alz.org/site/DocServer/caregivers_fact_sheet.pdf?docID=3022.