Investors who work with financial advisors are more likely to have long-term care insurance – an important consideration in retirement planning according to experts. Learn more.
Main Street investors who have close working relationships with financial advisors are more likely to purchase long-term care insurance than investors who go it alone, according to Millionaire Corner research that suggests advisors can play an important role in helping clients plan for aging and retirement.
Less than one-fourth of “self-directed” Main Street investors have long-term care insurance, according to a study on financial product ownership completed by Millionaire Corner in the fourth quarter of 2011. (Millionaire Corner defines a Main Street American as having a net worth of $100,000 to $1 million, not including primary residence.)
That share of Main Street investors with long-term care insurance nearly doubles to 44 percent for “advisor-dependent” individuals who rely on financial advisors to make most or all of their investment decisions. Long-term care insurance ownership is 37 percent for the “advisor-assisted,” investors who consult with financial advisors on most of their needs but make most of the final decisions themselves.
Long-term care insurance is one strategy for covering the costs of care should an investor become mentally or physical impaired - costs that can quickly deplete retirement savings. The average annual cost for an assisted living facility is $39,240, while a room in a private nursing home costs an average of $85,775 a year, according to insights provided by the American Institute of Certified Public Accountants or AICPA, which notes, “With such steep costs, it is important for older Americans to determine if they are likely to need long-term care insurance as they grow older.”
Ted Sarenski, chair of the AICPA’s task force on elder care, recommends investors consider the following five questions when evaluating whether to purchase long-term care:
1. Have you budgeted for in-home nursing care or in-home services in retirement?
2. Does your family have a history of longevity or dementia?
3. Do you have nearby family who can help you?
4. Have you researched both the cost of long-term care insurance, and the cost of daily care should you become unable to care for yourself?
5. Do you realize that many long-term care insurance policies cover in-home care, which is preferred by most of the elderly?
The decision to purchase long-term care insurance can be a complicated one, especially in today’s rapidly changing insurance market, according to the AICPA. CPAs or other types of financial advisors can help their clients determine which long-term care strategies best meet their individual needs.