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RetiRement abRoad Reality check > 95
The Dreaded
Question
For some planners, there is nothing more
difficult to answer than, ‘Do you have
long-term care insurance?’
By Miriam Rozen
Asked if she recommends long-term care insurance to her clients and if she’s purchased it for herself,
Seattle planner Therese Govern
groans. Her response is not unusual.
Other financial planners use
words like “unpalatable” and “
imperfect” to describe long-term care
insurance products. But, despite misgivings, many of them — although
certainly not all — conclude that they
and their clients should shell out for
this kind of protection.
As most financial planners
know, decisions about long-term
care insurance are difficult. Choosing a provider and a long-term care
policy means choosing a plan to live
out your last days; it is an extremely
emotional calculus.
Add to that the fact that some
insurance providers and policies
fail to deliver as promised. Then
recognize that it is difficult to deter-
mine just when it is an opportune
moment, in terms of health condi-
tions and life expectancy, to apply
for coverage. Is there any doubt why
the option of just saying no looks
mighty attractive?
SELF-INSURANCE
Many financial planners, particularly
those whose clients have significant
assets, do just that when the ques-
tion of long-term care insurance
arises. “It’s not for our clientele,” says
John Przybylski, director of financial
planning at Federal Street Advisors
in Boston, which has $4.2 billion in
assets under management. “They are
self-insured.”
Przybylski, whose firm serves
clients with at least $15 million in
assets, says that he hasn’t signed off
entirely on the notion of long-term
care insurance for himself, but that
his clients don’t like insurance in
general and believe that, with this
type of product, “there are a lot more
unknowns.”
But other financial planners say
that without $10 million or more
in assets, an individual cannot pre-
sume that he or she is adequately
self-insured for the unknown.
LENG TH OF COVERAGE
Govern recommends that most of
her clients buy insurance to cover
two or three years of long-term care
— not lifetime coverage. Given its
costs, she says, nobody should buy
lifetime long-term care coverage.
She concedes that even shorter
long-term care insurance products
are “very expensive” and “you have
to hold your breath,” because the
industry has a history of imposing
steep premium increases. She also
notes that the financial ratings of
Financial-Planning.com
November 2012 Financial Planning 89
