22 LONGISLANDPRESS.COM • AUGUST 2018
Policies don’t come cheap, especially
if you wait until your 50s or
older to buy one. They can run a few
thousand dollars a year.
“I continue to hear that longterm
care insurance is expensive,
but compared to what?” says Brett
Anderson, president of St. Croix
Advisors in Hudson, Wisconsin.
“If you need ongoing care, you
could easily spend $8,000, $10,000,
$15,000 a month. I don’t see LTC
insurance as expense, I see it as
pre-paying in the event you need
extended care, and you want to
protect your loved ones and your
assets by transferring some or all
the risk to an insurance company.”
EXPLORE
SELF-INSURANCE
The reality is, rising premiums
are too expensive for middle-income
Americans, says Lingke Wang,
co-founder of Ovid Life in San Francisco.
For many, self-insuring is their
best solution.
What does that mean? You save
enough to cover your own long-term
care expenses. There are advantages.
“You have more choices,” says
Matthew Rappaport, counsel with
the law firm of Sahn Ward Coschignano
in Uniondale. “You can go to a
high-level facility or choose to pay a
family member to administer care
in any setting. Government-funded
long-term care typically is more
restrictive. I wouldn’t want to be
left with only the choices Medicaid
provides me.”
Secondarily, going through the insurance
process spurs people to address
related needs such as estate planning,
financial planning, and retirement
spending projections, he says.
One way to self-insure is with
whole life insurance that builds usable
cash values and has a long-term
care rider.
“It’s often less expensive and a
much richer and all-encompassing
way to get the benefits of long-term
care, along with a death benefit and
the potential to build cash,” says
Michele Lee, financial representative
with Guardian Life Insurance in
Jericho.
STRATEGIES FOR
SUCCESS
“Self-insuring is typically not done
with accuracy or with any real ability
to solve the equation,” says Lou Cannataro,
partner, Cannataro Park Avenue
Financial in Manhattan. “Quite often,
it just seems to be the better alternative
than spending significant dollars
insuring against something that may
not occur. Most do not realize the
amount of money that can be lost to a
long-term care need.”
His plan: “Build out your planning
retirement model factoring in all
of your goals and monetary needs
through your life span,” he says.
If there is a shortage you cannot
afford to self-insure. If your planning
shows you can retire and not run out
of money, you’re in good shape.
“Layer into this planning a longterm
care need,” he adds. “If your
goals are still accomplished even
with the cash flow out for care, you
can self-insure.”
WHAT’S A GOOD RULE
OF THUMB?
“If you have at least $250,000 in
current dollars to be inflated each
year by 5 percent to spend on each
occurrence of care in the future, plus
all your other retirement assets to
accomplish your goals, you can likely
self-insure,” says Cannataro.
Have a written game plan for reducing
debt. Free up income to invest
in retirement and self-insure. Put in
place an emergency fund of at least
three to six months, a year if you’re
older.
“Don’t put all your money in a
retirement fund which is not accessible
before you’re 59 1/2 and have
no emergency fund,” says Kalen
Omo, owner of Kalen Omo Financial
Coaching in Tucson. “This could
come back to haunt you if an unexpected
event forces you to dip into
retirement sooner than you would
like to.”
PERSONAL FINANCE
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