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Long-Term Careless

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Discussing long-term care insurance can be tough—assuming advisors can get their clients to discuss it at all. People’s reluctance to face their own mortality, never mind possibly becoming dependent on someone else for their daily needs, can be overwhelming.

But while cost, insurability and policy features may come up during a discussion, some factors don’t get discussed although they merit inclusion.

According to a recent study conducted by Genworth in collaboration with J&K Solutions, only 11% of adults say they’ve bought LTCI. They’re also far more concerned with saving enough for their retirement (58%) than with caring for ailing parents (4%). While it remains to be seen how many of those not prioritizing the care of ailing parents eventually go on to become caregivers themselves, an earlier Genworth study conducted among both caregivers and care recipients revealed some pretty telling statistics.

That second study found, among other things, that the gender gap is narrowing in caregiving—48% of males now find themselves involved in caregiving, while earlier studies found that women predominated as caregivers by a large margin. According to Pam Nelson, vice president of customer insights at Genworth, “Part of the reason we’re seeing […] more males is the changing work environment, where people work out of their homes.”

That said, it’s not getting any easier. In fact, quantifying the cost of caregiving can be shocking. “We asked caregivers some of the things they had to give up [to provide care]. Sixty-five percent ended up having to miss some time from work.”

Of those people, Genworth also asked if they had lost income, and it should come as no surprise that they did. What might be surprising is that almost half reported income loss; those people estimated the amount of lost income at 40%. “That’s really significant,” said Nelson.

Not only did people lose income, 33% reported losing career opportunities and 28% either lost their jobs or had to change careers.

And that doesn’t include the cost to caregivers of contributing financially to elders’ expenses. Respondents reported covering an average of $8,080 in out-of-pocket expenses, with nearly 60% saying they’d cut back on their own discretionary spending to do so.

Advisors should keep those statistics in mind when they consider the long-term stability of client assets. They should also consider these from the first study: 45% of respondents have no plans to buy LTCI; 32% say it’s too expensive and 30% have never thought about it or don’t want to think about it.

Then there are the other costs—to professional advancement; to other family members; to mental and physical health, not just of caregivers but even of those for whom they provided care.

The study found care recipients being cared for by family members were often under more stress than their caregivers. Nelson said, “They felt bad about being a burden to their loved ones.”

Nelson said, “We asked caregivers and recipients, ‘Looking back, do you believe that you may have experienced any of the following as a result of your recipient needing long-term care: less time to care for yourself, less time with a spouse/partner/children, negative mood, sleep deprivation, insomnia, excessive isolation.” Caregivers whose recipients had insurance were less likely to report those problems or they were less severe, Nelson said.

Many still associate LTCI with nursing homes and forgo it because they want to stay at home and don’t realize that coverage can give them that option. Nelson said that many plans offer options to modify a home rather than transferring to a facility.

Then there’s another obstacle: advisors. Nelson called it the “intimidation factor”—when advisors don’t feel they know enough about LTCI to have a meaningful discussion with clients.

Considering that there are many options available to get some form of LTC coverage—even riders on life insurance policies can provide limited coverage to varying degrees, and in some cases employers make LTC policies available—and that the IRS has once again increased the premium amount deductible for qualified policies purchased in 2015, there are a lot of reasons to have a discussion with clients about potential LTC needs.