Midlife crisis: Life or death?

Midlife crises for many feds is hitting that age where Long-term care insurance might be a better deal for your family than a big-bucks life insurance policy. For many people, D-day (deciding when to get it) is the major hurdle.

Life insurance is a one-time payment. And it can be a financial life-saver for your family. It can be used to pay off a mortgage, get the kids in and out of college, etc. Or keep feeding same (and your survivor) through high school if you and your paycheck are not around. But at some point, it is worth considering dropping or downsizing life insurance to use that premium money for insurance that will pay someone to take care of you following a catastrophic illness (like a stroke or dementia) or accident. The trick is deciding if the switch is worthwhile, and when and why to do it.

During the just-concluded federal long-term care insurance open season, about 45,000 people signed up for the government-endorsed program. That was a 20 percent increase, bringing the total number of feds covered by the FLTCIP to 270,000. Many others have individual policies through other carriers.

During the open season, the typical new enrollee picked options that will pay them (or their caregiver) $150-$200 per day for three years with inflation protection. That is, the daily rate can go up, but premiums stay the same. Most people who signed up were in their early 50s. Like life insurance, the younger you are, the lower the premiums.

Last week on our Your Turn radio show, Paul Forte and Beth O’Brien, of Long Term Partners LLC, talked about the open season results and why such a large number of people signed up for coverage. They were expecting about half the turnout they got. Forte said the downturn in the economy may have inspired many feds to reshuffle their financial priorities and decide they were at the stage where LTC for themselves was a better deal, for their families, than life insurance.

People can still sign up for the federal LTC program (or any available outside program), but now that the open season is over they will have to answer additional medical underwriting questions.

So, should you consider trading or reducing coverage? Life or LTC: What’s best for you and your family? Last week, Government Executive columnist Tammy Flanagan took on the issue, looked at the pros and cons and crunched some numbers. If you are in that age and family target zone range it is must reading.


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