The issue of long-term care

Insurance is a program that lets you pay instalments now against the risk of expenses in the future. With something like fire insurance, you get a quote for rebuilding your home or business premises from the ground up. That represents the maximum amount necessary to put you back into the position before the fire struck. No matter how optimistic or pessimistic you are, you and the insurance company can put a price on the potential loss. Unfortunately that does not work so well when it comes to medical costs. The young and optimistic have perfect health and prefer not to think about the risk of accidents or illness.

These are things that happen to other people. But, sooner or later, there is greater realism. As the years roll by, most recognize the probability of illness is increasing and put some level of protection in place. But the basic question of optimism and pessimism never goes away. Do we assume the injury or disease will come and go quickly? Will there only be a few tests, no major interventions and no continuing costs? Or will the problem prove more serious, require major surgery and long-term care? Until the recession hit, we could all afford to be reasonably laid back. Those more inclined to provide against the darker possibilities would add a few dollars a month to the premium instalments and sleep well at night. But with every family budget coming under pressure as the economy tanks and unemployment stalks the land, the question becomes more difficult to resolve. Those few extra dollars a month have to be justified.

Why think about it now? Well, let's take the worst case scenario. Suppose you or one of your family are struck down. Suddenly, you are looking at big bills and worried about the extent of the cover available under the policy. This is not the best time to open negotiations with the insurer. You are emotionally weak. Worse, the reality of large losses will color the reaction of your insurer. The best time for these negotiations is when you are calm and all the losses for the insurer are in the future. This allows everyone to deal with hypotheticals and not get alarmed when big numbers are mentioned. So why do insurers start talking about big numbers? The national statistics show claims for long-term care almost always fall into the range of three to five years. That's a big bill when you add in all the different services potentially required, whether in your own home or a nursing facility.

So what happens to people without long-term health insurance? The worst happens to those who have built up assets. Instead of providing for their families, they find all their assets sold to cover the apparently endless series of bills. Of course, some families have one or two who can be persuaded to act as carers. They sacrifice their earning capacity to provide home nursing. This, of course, is the worst case, where the losses just keep mounting up as families cope with the emotional and financial costs of the care. Health insurance provides protection for retirement savings and the assets readied for the children to inherit. Long-term policies cannot remove the emotional burden of living with an injured or dying loved one, but it can make the time less financially stressful.

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