Last weekend I did some study about financial planning for parents on the site for Fidelity Investments.
I do understand that talking to your parents about their financial planning can be a very difficult discussion to have. As kids we were taught that it is not appropriate to question people about their incomes or spending patterns from the very people we are talking to.
Unfortunately, as time goes by, we are forced to have that conversation. If we are lucky, are parents have already faced the fact that they are mortal and have made appropriate planning. When my wife had to have “the conversation” with her parents it was very easy. Her dad took her upstairs to show her where his will and legal papers were. He has already made arrangements for all his children in the event of his death. He also has a medical power of attorney in the event he is not able to make medical decisions for himself.
Although it is a hard conversation to have, children often need to “light a fire under their parents” to get them to face their own mortality and make plans.
Fidelity Investments encourages children to help their parents make financial plans for the future. That includes making plans for the future when they are still alive but not able to do all the things they could when they were young.
Below you will see three reasons why a child would be interested in buying Long Term Care insurance for their mom and dad. It would not just benefit your parents but you as well.
Fidelity Co. recommends the purchase of Long Term Care insurance if there is a fear of the need of a nursing home in the future. According to Genworth’s 2012 survey of Long Term Care costs, the national average for a stay in a nursing home is $222 a day for a private room. That is $81.030 a year.
According to Fidelity Investments, children should purchase Long Term Care insurance for their parents if their parents do not buy it themselves and have $150,000 to $450,000 in savings.
The average stay in a nursing home is 2.5 years. That would mean that $202,575 of their savings would disappear. Long Term Care insurance would preserve all of that money for the retirement of the spouse who remains healthy and later for the children.
If your financial goal is to preserve what your parents have been able to accumulate for your inheritance, Long Term Care insurance can be an answer to your concerns for 1-2% of the cost of a nursing home stay in premiums each year.
The other option is to buy life insurance to replenish their estate when they die. The problem is that most life insurance plans will not pay for Long Term Care while your parents are alive. While term life insurance premiums can be less than the cost of Long Term Care insurance, older parents may only qualify for Universal Life or Whole Life insurance. The premiums for policies of those types that are sufficient for your goals, are very close to what you would pay for Long Term Care insurance.
The difference is that with Long Term Care insurance, the final days of your parents can me made more comfortable. If you elect to use Life insurance, the death benefit will not help your parents.
Click the link if you are interested in learning more about LONG TERM CARE INSURANCE. If, after you have researched Long Term Care insurance, you want to pursue it for your parents but have no insurance agent whom you trust to help you, I would like to apply for the job. You can learn more about me here. If I can help you, use the form to the right to contact me.