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Should you Consider Long Term Care Insurance?

Lisa Quist
Educational Opportunities: 
Home > Education & Events > October 2020 > Should you Consider Long Term Care Insurance?

You’ve worked all your life to build your farming operation into what it is today — maybe even several generations have worked to cumulatively build what your family has. But what happens if Grandma, or Grandpa, or Mom or Dad has an extended long-term care stay? What will that do to your farm and family?

According to the U.S. Department of Health and Human Services, the average cost of long-term care services and support (LTSS) is $138,000 per year, and 52 percent of the population will need some form of assistance care after the age of 65 (, 2020). According to the National Care Planning Council, the average length of stay is 835 days, or two years and three months (National Care Planning Council). If you do the calculation, the average cost of the stay is $310,500.

Can your farm afford to pay that cost out of pocket? For the most part, Medicare does not cover a long-term care stay, and Medicaid only pays if you meet its financial requirements. Rules for Medicaid vary by state, but in general, a married couple must have under $3,000 of countable assets to qualify for Medicaid. The calculations are different by state and can be quite complicated, but suffice it to say, if Grandma owns the farm and goes into a nursing home, the farm will likely be responsible for paying the bill. How will your farm cover it? Will you have to sell land? Equipment? According to the U.S. Department of Agriculture, the average price for a tillable acre in Illinois, Minnesota and Wisconsin is $5,653. Therefore, to cover Grandma’s proverbial stay, your farm would have to sell 54.9 acres to pay the nursing home bill.

What can you do? How can you manage this risk? Long-term care insurance is a great vehicle for managing this risk to the farm you have worked so hard to build.

Many of us know what long-term care insurance is. This is insurance that covers all or part of your nursing home or assisted living costs. You pay a premium, and then when you have a claim, the insurance pays out your benefit. If you never need long-term care assistance, there is no benefit paid out. Many of us also know what life insurance is. Life insurance is insurance that pays out the death benefit at the time of your death to your beneficiaries. But do you know what life insurance with living benefits is? This is a life insurance policy that includes coverage for nursing home, assisted living or home health care while you are still living. This type of policy will pay out in the event of a chronic, critical or terminal illness of the insured. The insured can draw a portion of the death benefit to help offset expenses such as medical bills, income replacement, deductibles, treatments and more. At death, the balance of the death benefit is still paid out to the beneficiaries.* With this type of policy, as long as the premiums are paid, there is a benefit paid regardless of your care needs as you age. For many, it is seen as a win-win. (*Terms vary based on company and coverage. Be sure to talk to your financial professional about what the best option is for you, your family and your farming operation.)

Life insurance with living benefits does not replace a traditional long-term care insurance policy, but it can be a great option to discuss with your financial adviser to find the best fit for your family and operation.

The need for care as you age does not have to be scary or intimidating. The important thing is to have a conversation and make a plan to protect your farming assets that you have worked a lifetime to build.

For more information about traditional long-term care insurance or a life insurance policy with living benefits, talk to your financial officer at Compeer Financial, contact the Compeer Life Insurance Department at [email protected] or call Compeer at 1-844-426-6733.
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