Aging baby boomers consider long-term care

During these good economic times, marked by low inflation and a bullish stock market, it's easy to become complacent about preserving your appreciated assets to supplement retirement income, without regard to a danger that is looming in plain sight.

At a recent nationally broadcast video teleconference, cosponsored by the Society of Financial Service Professionals and the International Association for Financial Planning, financial advisers warned the nation's aging baby boomers to be aware of how the high cost of long-term care can quickly deplete or devastate financial resources.

"Perhaps the most disturbing fact which came out of a recent John Hancock survey, published in March of this year, was that three out of four respondents incorrectly thought Medicare was the primary funding source for long-term care," said Bob Littell, CLU, ChFC, an Atlanta-based insurance and financial service professional who served on the video teleconference faculty.

Dealing with a prolonged illness or disability are two topics many baby boomers would like to avoid altogether. "The truth is, nobody gets out of here alive, and most of us don't go very quietly, meaning that we have some major end-of-life medical expenses either spread out over a prolonged period or lumped into the last few days, weeks or months of life," Littell said.

Littell informs his clients about long-term care issues before problems arise.

These boomers are also facing a questionable future in regard to the cost of long-term care because of uncertain morbidity trends.

Although life expectancy is estimated to be longer in the future, whether these last years will be spent in a state of good health or in ill health is still unable to be known.

Current long-term care policies are guaranteed renewable rather than noncancelable, meaning that even if a company has low premiums, these rates may rise in the future depending on which trend becomes a reality.

Littell identified two emerging trends in life insurance policy development that provide long-term care funding alternatives: permanent (whole) life insurance policies with cash values that can be accessed in the form of withdrawals and loans to pay for long-term care