A lot of people follow Suze Orman’s advice when it comes to making financial decisions. It isn’t any surprise, however, that she is not a “favorite daughter” among many insurance agents, mostly due to the fact that she is of the “buy term and invest the difference” school of thought. [While term life insurance is the right fit for many people, as this post shows, it’s not necessarily an all-or-nothing decision between term and permanent life insurance.]
But I digress.
The reason I’m writing about Suze is that she actually wrote an article in the December issue of O, The Oprah Magazine supporting an insurance product that many people either don’t know about or think is too expensive to pay attention to.
Here’s what she said about long-term care insurance: “I was blessed to be able to afford medical treatment for my mother, who lived to be 97, whenever she needed it, but I sure wish we’d bought her long-term care insurance decades ago.”
She goes on to point out that while the annual premiums (she quotes $1,000-$2,000) are a big commitment, long-term care insurance “can potentially save you tens of thousands of dollars a year if you’re unable to care for yourself.”
And, she also suggests that it’s not just for you, but something you can help your parents with—assist with premium payments—if they are unable to afford it.
Suze says, “… it’s a small price to pay to reap huge benefits for the people you love.”
I think most would agree. What do you think about Suze’s advice?
… Here’s why.
I’m not going to barrage you with a bunch of statistics about who’s likely to need it (although you should know, surprisingly, 37% of people who need long-term care are 64 years old or younger) or how much long-term care costs (a lot, just check here). Instead, I’m going to let you listen to those who have it talk about why they got it and when. So, let me step out of the way:
To learn more about long-term care insurance and it’s benefits, go here.
You are trying to determine how much money you need to save, net of loans and grant money, for your children’s college costs. 
You think you have a handle on this, but have you included the once per week pizza? One pizza a week means $2,000 spent on pizza by the time your son or daughter graduates from a four-year program. What about the occasional beer? OK, she is under 21, so let’s make that soda. I bet you didn’t figure this into your number, because most families plan their college expenses based on figures provided by the colleges and universities themselves, which are very loose estimates on a degree’s cost and essentials such as transportation and textbooks.
The College Board reports that in 2010-2011, students could expect to spend an average of $1,137 on textbooks and supplies, and some textbooks may cost several hundred dollars.
Transportation is another matter and may run several thousand dollars per year depending on whether your child lives on campus or commutes. If her or she commutes, how far and what will the costs be? What is the cost of fuel and maintenance on his or her vehicle?
What if your child decides to live in an apartment? Now you need to add in rent, insurance, groceries and utilities. What about laundry, cell phone and internet service? The list goes on.
Ahh! You knew this was going to be painful. But wait. What happens if you are not here to save or pay for this? What if you get hit by the proverbial bus?
I have a solution. It’s called life insurance. It is a very inexpensive solution, and if you do get hit by the bus, the life insurance can complete your savings and pay for your child’s education. If you don’t have life insurance, you should. Just read one of our LIFE Lessons stories—like Brittney LaCombe’s—to see what happens when you don’t.
Put life insurance into your planning. It’s part of you taking personal financial responsibility for your family.
Do you know the true cost of long-term care?
Chances are, like most consumers, the financial impact of long-term care can come 
as a shock when the situation presents itself. And according to the National Clearinghouse for Long Term Care Information, there’s a 70 percent chance that you (or another family member) will be faced with that scenario sometime after age 65.
But according to the Genworth study, Beyond Dollars: The True Impact of Long Term Caring, almost half of care recipients had not considered the possibility of needing long-term care—an outcome that can be caused by a prolonged physical illness, disability or severe cognitive impairment.
When that occurs, the paid assistance options (and their national median costs according to the Genworth 2012 Cost of Care Survey) include:
- Licensed homemaker services ($18/hour)
- Licensed home health aide services ($19/hour)
- Adult day health care ($61/hour)
- Assisted living facility ($3,300/month)
- Nursing home ($200-$222/day)
And if you believe that the full cost will be covered by Medicare or Medicaid, understand that the former covers only short-term skilled nursing home care, while the latter only applies if you meet specific poverty guidelines.
Unpaid Caregiving
Family members often step up to the plate, with 87% providing care for an immediate family member, while 37% of care recipients were moved into a family member’s home for a period of time, according to the Beyond Dollars study. But even family caregiving comes with a price—both dollar costs since, even with insurance, there are out-of-pocket expenses and also “hidden costs” in terms of time, energy, impact on other family relationships and professional obligations.
Direct and Indirect Costs of Caregiving
According to the study, the average amount care recipients spend out-of-pocket for their own care (not including the cost of facility care) can total $14,000, with family members contributing another $8,000.
But the financial impact doesn’t stop there. Many times, the caregiver’s work life suffers, with nearly one-fifth of those surveyed reporting a direct loss of career opportunities, while 44% had to cut back on their hours, which had a detrimental effect on their income.
But caregiving isn’t just a clear-cut dollars-and-cents calculation. The impact reverberates through all aspects of the caregiver’s life, particularly concerning other family relationships. With caregivers having less time and energy to devote to their spouses and children, those relationships can experience significant stress. With 42% of caregivers reporting that the family member needing care lived with them for three years or more (24% have been caregiving for over eight years), the long-term effect can’t be denied.
What can you do now to help lessen the impact on yourself and your family down the road? Start by educating yourself about the cost of long-term care services, coverage options for long-term care and long-term care insurance here. You can also click here for a free 8-page guide to long-term care insurance from the non-profit LIFE Foundation.
Then discuss your options with your family before the need arises. Having a plan in place reduces everyone’s stress, and allows all parties involved to develop strategies to cover different scenarios.
Finally, take advantage of the information and resources provided by caregiving organizations, such as the National Family of Caregivers Association and the National Alliance for Caregiving.
(This post originally ran in July of 2011, but in the wake of Hurricane Sandy, it seems pertinent to run it again–especially in light of the advice in the last paragraph.)
How many of you have legal and financial documents stashed in different drawers in different locations? Perhaps you have some in your home safe, some in drawers in the bedroom, others in the den and more in the office. What happens when you become sick or die? Does any one person know where all the documents are located? Probably not, including you.
The Wall Street Journal published a very interesting article, The 25 Documents You Need Before You Die, addressing just this problem. The article was two pages long, very detailed and well written, so let me give you a synopsis of what it said.
According to the WSJ, there are six categories of documents which should be maintained: marriage and divorce, life insurance and retirement, health care, bank accounts, proof of ownership and the “essentials.” Here is what should be included in these categories.
Marriage and Divorce
o Marriage license
o Divorce papers
Life Insurance and Retirement
o Life insurance policies
o Individual retirement accounts
o 401(k) accounts
o Pension documents
o Annuity contracts
Health Care
o Personal and family medical history
o Durable health-care power of attorney
o Authorization to release health-care information
o Living will
o Do-not-resuscitate order
o Pre-need declaration of guardianship (not required in all states, but an excellent idea)
Bank Accounts
o List of bank accounts
o List of investment accounts
o List of all user names and passwords
o List of safe-deposit boxes
Proof of ownership
o Housing, land and cemetery deeds
o Escrow mortgage accounts
o Proof of loans made and debts owed
o Vehicle titles
o Stock certificates, savings bonds and brokerage accounts
o Partnership and corporate operating agreements
o Tax returns
The Essentials
o Will
o Letter of instruction
o Other business documents such as buy-sell or stock redemption agreements
My list includes more than the 25 mentioned by the WSJ, and your list may include others. Here is another hint from someone who lives in an area prone to severe storms and flooding. Put your documents in water-tight containers to prevent loss or damage due to water.
Now you have your list. Start organizing!
