When my father passed away, I purchased a long-term care (LTC) insurance policy for my mother, then age 74. After being a snowbird for many years going back and forth between Pennsylvania and Florida, she permanently relocated to Florida at age 87. Not for long. Many of her friends died, and mom was too lonely. Recognizing the reality she faced, Mom agreed to buy a lifecare contract at a continuing care retirement community (CCRC).
After my mom passed away at age 99, I wondered whether the economics of having the long-term care insurance and the lifecare contract made sense.
The facts:
Mom had no chronic conditions and remained in independent living until July 2022 when she was admitted to the memory unit at age 98. Upon entrance, she qualified for benefit payments from her long-term care policy under the cognitive loss provision. She also qualified under the lifecare contract and her monthly fees were capped at the independent living rate.
The findings:
LTC lifetime insurance premiums paid: $97,000 | Lifetime policy benefits realized: $105,000
CCRC Lifecare contract upfront payment: $161,000 | Benefits realized: $187,000
The long-term care insurance was purchased not knowing whether Mom would ever move to a lifecare community. With the CCRC lifecare contract in place, the value of having the LTC policy was marginal. If admitted to a memory unit earlier in her life, without the lifecare contract, the insurance would have paid out more benefits than the premiums, but NOT covered the cost sufficiently. In this case, the CCRC lifecare contract was more valuable than the insurance policy.
Through my personal experience and research, I found that the bottom line is if you’re uncertain about entering a continuing care retirement community in your future, consider purchasing long-term care insurance policy with benefits that cover memory unit costs.
Making these decisions for yourself or your loved ones can be overwhelming and arduous, but RTD can help you navigate them. We look holistically at our clients’ financial plans to determine the options, share decision-making considerations and help them understand how this fits into the whole picture.