09

Ways to Fend Off The Costs of a Disability

posted on

According to information from the World Health Organization, 35.6 million people have dementia. Those numbers are expected to double by 2030. Strokes are known for permanently disabling 5 million people every year. Although most people are able to plan for their mortality with life insurance and the use of a will, many people tend to ignore the risk of becoming permanently incapacitated. This can be far more devastating to their family’s finances in the long run because it means that loved ones are forced to pay for this care instead.

Based on information from a 2012 study done by MetLife, a stay in the average U.S assisted living facility can cost $42,600 a year, while a private nursing home costs upwards of $81,030. The traditional length of a stay in a nursing home is around 835 days. That can be a significant amount of money for a family to be responsible for paying in terms of care for a loved one, though many families struggle to do it on a regular basis.

It is a good idea to consider consolidating accounts with reputable financial institutions and putting any assets into a trust to make things simpler for loved ones that may become responsible for your care in the future. Individuals should get a revocable living trust with family members as successor trustees or disability trustees. Successor trustees have a clearer amount of authority towards being able to manage your assets when you are no longer able to. When you are using a power of attorney, there are many additional steps that need to be taken in order to gain control. The financial institution should be co-trustee with you in case the successors in your family aren’t able to handle the situation for you.

Although long term care insurance can be very helpful when someone is incapacitated, it’s more expensive than anything else for those who need to handle the premiums. Many insurance companies have left the long term care insurance portion of the industry because they felt that it was too unprofitable since people have started living longer. However, there are still some companies that offer coverage, such as Mutual of Omaha, John Hancock Financial Services, MedAmerica, and Massachusetts Mutual Life Insurance Company. These are options that are available for those who know they wouldn’t be able to afford the cost of long term care on their own if they had to rely on it in the future.

A hybrid policy is another option. This would mean that it was a life insurance contract that has a long term care rider. If the individual never needs long term care in the future, then the amount that’s been paid in the premiums can be used for money for the beneficiaries of the life insurance contract. However, if the individual ever needs long term care, the money that’s been paid into the policy will cover it.