Our Egalitarian Society & the Economic Down-turn

No, I'm not going to propose that we are all equal in our circumstances caused by the economic down-turn (AKA recession). But our egalitarian society is at play in responsibility for certain next choices.

In the olden days (I am certain this was as short as a decade ago), we were assured that financial advisers could guide us well and that we were not expected to be able to analyze markets, project long-term needs, and so forth. So, regardless of whether you took that to mean you should follow advice to invest in stocks, buy bonds, or buy an annuity, you probably nodded agreeably to other (sure) things: your employer's retirement plan and the offer of a long-term care insurance policy.

Well, times have changed.

This week, a Wall Street Journal article* reported on a change in Conseco's long-term care insurance policies that may increase premiums for the customers and even reduce their benefits in the future. The change is intended to "cast off" a losing proposition for the company as the policies are transferred to an independent trust that will handle claims as it can based on $175 million current capital. The 140,000 policy holders may or may not be well served—only time will tell. But the fact that new policies haven't been sold since 2003 suggests that Conseco predicted bad times ahead for long-term care policies.

Here's my point on our egalitarian society: the WSJ article advises that new buyers should "take particular care in picking out a financially stable insurer."

A recent conversation with a friend in Colorado underscores the power of that advisory: "Our financial guy says we need to decide about keeping Jeffrey's retirement account with the company or cashing out now. He said we have to think about whether the company will be around in 8 years to pay out the money. I told him I thought he was supposed to know. And he said, no, it's up to us to make that assessment."

Well, as I said, times have changed. Experts aren't even claiming their expert status anymore, or at least they don't want to shoulder the responsibility of analysis. And in an egalitarian society, after all, we are all equally able to make the analysis. There's the rub. It just may be that we really are equally able.

* McQueen, M. P., (2008, December 3). "Insurer Casts Off Long-Term-Care Policies," Wall Street Journal.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Long Term Care Insurance & ADLs

ADLs: Activities of Daily Living, from buttoning your own clothes to feeding yourself. Simple concept but revolutionary when you get around to assessing a person's ability to live unassisted. Either you can do them or you can't. When you can't, you need long term care, which may or may not involve medical care.

Costs of long term care:
Highest = nursing home
Next = assisted living facility
Lowest = own home

What's not so easy to predict is the actual dollar figures, and that's what drives sales of long term care insurance. Increasingly, baby boomers are buying that insurance, expecting to have to cover these costs that Medicare excludes. I haven't seen any statistics about who is purchasing, but I would predict two primary markets: those people whose employers have put the option before them in convenient fashion, and those boomers who are currently paying for their elderly parents' care in assisted living or nursing homes. (Too late to purchase insurance for their parents, the boomers are predicting their own future, perhaps based largely on the obvious evidence of longevity in the family.)

ADLs and IADLs: Just a shirt button doesn't hint at the daily activities that separate independence from dependence, of course. We'll adopt velcro and sashes and other work-arounds! But the full list of ADLs is meaningful: hygiene, nutrition, safety. Another list is called Instrumental Activities of Daily Living (IADLs) and details managing money, shopping, and so forth. The ADLs are explained in a web resource on Health Assessment published by the American Geriatrics Society.

Insurance options: Boomers are now examining long term care insurance plans as intently as they once researched life insurance. The choice between whole and term seems like child's play, now. The array of options for long term care involves levels of care, length of care, location of care. Add to that the pragmatic choices of when to purchase and when to delay, and when to stop paying premiums. Some of the questions about risk are addressed by the National Clearinghouse for Long-Term Care Information.

On a personal note: I do purchase long term care insurance. Every September, I write an annual premium check and I accept most of the upgrades as they are offered. This has meant an increase in premium from a little under $400/year to a little more than $400/year, over the past 7 years. I purchase the insurance because I fear I will live forever. Tom Bold, on the other hand, eschews the concept. I know this means that I am his long term care insurance. ~ Lida

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.