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7 wells of LTC planning terror

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To a young worker, retirement sounds like one (or two) great decades of backpacking across China.

Death is scary.

The idea of needing – or providing – long-term care (LTC) may be scarier.

There’s a big difference between selling a life or annuity rider that can help the buyer fund post-retirement golf club dues – and a rider or stand-alone insurance policy that covers the cost of … that unmentionable risk.

Nationwide Financial, for example, has been focusing on use of life-LTC hybrids and annuity-LTC hybrids for years. The company keeps raising the subject, even in the face of a low interest rate environment that can make selling many types of life and annuity products as challenging as writing stand-alone long-term care insurance (LTCI).

The company recently added indemnity-style linked to a fixed-premium universal life policy.

Eric Henderson, a senior vice president, said in an interview that there’s an obvious reason why the company is in the hybrid market: Consumers are thinking about LTC expenses.

“More and more, advisors are having to have that conversation,” Henderson said in an interview.

But that doesn’t mean that either the consumers or the advisors have an easy time talking about the topic.

Nationwide and its competitors have commissioned consumer surveys that shed some light on the grim thoughts that scuttle through consumers’ minds when they try to overcome their fear and think about the possibility that, someday, they may have difficulty with performing two or more activities of daily living.

Here’s a look at seven common sources of LTC-related consumer terror.

1. Just trying to figure out where to begin can be intimidating.

When Northwestern Mutual commissioned  survey of 2,028 U.S. adults ages 18 and older, including 344 of the caregivers, 23 percent of the noncaregivers admitted they had no clue how being a caregiver would affect their lives.

The SCAN Foundation commissioned a survey of 1,019 U.S. adults ages 40 and older and found that only 35 percent even claimed to be “very comfortable” with thinking about getting older. Thirty-two percent said they were “somewhat comfortable” with the topic; and 31 percent said they would rather not talk about it.

2. They fear that acting as a caregiver would hurt their marriage or other relationship.

Twenty-three percent of the noncaregivers in the Northwestern survey said caregiving could hurt a relationship, and 16 percent said caregiving might force them to cut back on the number of hours spent working.

3. They think LTC needs could torpedo their retirement plans.

Nationwide Financial polled 801 Americans over age 50 with at least $150,000 in household income.

Sixty-one percent of those affluent pre retirees said they are “terrified” of what post-retirement acute and long-term care costs could do to their retirement plans. Only 22 percent said they had talked about health care costs with their retirement advisors.

4. They hate the idea of losing their memory or other mental abilities.

About 86 percent of the participants in the SCAN survey said they felt “quite a bit” of concern or a “great deal” of concern about loss of mental abilities.

5. They loathe the idea of loss of independence.

About 88 percent of the participants in that same SCAN survey said they felt quite a bit or a great deal of concern about aging lead to a loss of independence.

6. They dread nursing homes.

Twenty percent of the Nationwide Financial participants said they might eventually use assisted living facilities, and 10 percent said they might use nursing homes, but 54 percent said “they would rather die than live in a nursing home” the company said.

Seventy-eight of the participants said they equate the term “long-term care” with nursing home care.

7. They remember “Soylent Green.”

We don’t want to spoil it for you, but, if you’re talking to skittish baby boomers and members of Generation X about retirement and LTC planning, you probably should check it out.

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