LTNC Insurance is emerging as a personal risk management issue in divorce. It means more than long term care for someone in a nursing home. It can also mean the onset of a chronic disability brought on by an inujury or illness that could last 90 days or longer.
Annette Funicello has MS and it started at age 44. Today she is 57 years old.
Michael J. fox has Parkinson’s and it started at age 32. He is 46 years old.
Christopher Reeves had a spinal cord injury at age 40. He died 12 years later.
Traditionally we think of coverage only for the “older person,” but increased longevity is making LTNC more of a necessity. When looking for comprehensive LTNC coverage look for a contract that covers your costs in your home, at an assisted living facility or a nursing home.
You will want to carefully look at the following elements in the contract:
1. Make sure the monthly benefit covered in the contract is adequate for your geographical area, which can range between $1,500-15,000/month. (The current average cost for care in Seattle is $7500/month)
2. The elimination period (deductible) before the coverage starts can range from 0, 30, 60, 90, 180 to 730 days.
3. Benefit duration can last 2yr, 3yr, 4yr, 5yr, 6yr, 7yr, 10yr or lifetime benefit duration. (My grandmother lived 3 months short of 100 and lived in an assisted living facility for 9.5 years)
4. Inflation protection can be indexed, 5% simple, 5% compound, or have no COLA.
5. Payment options: Cash or reimbursement.
6. Additional considerations would include various rides such as shared care or return of premium, survivorship, etc.
You will need to design a policy that best fits your pocketbook, family history, and assets. I strongly urge my clients to seek a quote for coverage after age 45. The cost for the insurance goes up as you get older. Know what is going on in healthcare today, coupled with the numbers included with the baby boomers this is a risk you may want to insure against just as you do for the possibility of your house burning down.
You may have a LTNC policy that needs to be divided at the time of the divorce. If the policies on you and your spouse are individual policies this is not a problem. However, recently I met a couple that had a shared policy with Genworth. They were able to go to the issuing company and get 2 policies re-issued equal to 1/2 of the previous value of this contract. Check with your carrier if this situation is possible and start planning early in your divorce process.