Q: It seems there is a strong correlation between the national economic crisis and losing a lot of money from an unexpected LTCI event. Is there a way we can relate the two to help convince prospects of the need for LTC insurance?

A: Consumers, who have seen 30 percent to 50 percent or more of their net worth disappear as a result of the steep declines in the stock and housing markets, have experienced just a small sample of what it would be like if suddenly they found themselves needing long term care and didn’t have a plan in place to address those costs. Their hard-earned investments could be drastically reduced fairly quickly if suddenly they were dependent on their life savings to pay unexpected bills.

With average nursing home stays topping $77,380 annually (according to MetLife Mature Market Institute) and assisted living costs reaching approximately $36,096 (Genworth 2008 Cost of Care Survey), it wouldn’t take too long to put a major dent in life savings. For ideas on how to tie together the two concepts, I turned to some members of the National LTC Network. Here are their thoughts:

“If you lost half your net worth and needed long term care, you would be in a financially imperiled position of having to liquidate a proportionately larger chunk of your savings in an undervalued market with little opportunity to recover. In these times of tumultuous markets, it is more improbable than ever to self-fund and invest your way through a long term care event.”
Mike Skiens, Master Care Solutions, Portland, Ore.

“LTCI is a risk-based business. From the consumer’s point of view, it should be the insurance carrier who is assuming that risk. Taking premium dollars and turning them into a secure retirement is a predictable, safe option in today’s world of economic uncertainty. There is no better time than the present to protect the money that has not been lost in the investment world.”
Julie Gelbwaks Gerwitz, Gelbwaks Insurance Services / LTC Global, Plantation, Fla.

“In California, we have been particularly hard hit in all key economic areas. It came quickly and caught most of us by surprise. The investment strategy of some of the savviest consumers was quickly turned upside down. An accident or sudden illness that results in a long term care need can come as quickly and be just as devastating to a portfolio if not adequately planned for.”
Carol Gardner, Lifestyle Insurance Services, Inc., San Juan Capistrano, Calif.