Although we may believe long-term care is a concern only for older individuals, many of us confront the issue much earlier than we think. Children and teenagers often remember trips to a nursing home to visit an elderly relative. If their visits were an unsettling experience, it is likely to cloud expectations of future care and mold an adult who avoids or fears the topic.

Caregiving begins in earnest once that adult has children of his or her own. As those children grow and become independent, the adult's parents may begin to require attention and care themselves. At that point, caregivers-a high percentage of whom are women-begin thinking about the impact that health problems could have on their family. This article will discuss the ways in which caregivers look at long-term-care (LTC) insurance.

The Sandwich Generation

Caregiving women are largely baby boomer women between the ages of 45 and 59. These boomers are often referred to as the sandwich generation, because they are looking after the needs of children and parents simultaneously. When parents need care, boomer women spend huge chunks of time finding and coordinating care. They also watch a lifetime of savings begin to disappear as they provide for quality care. Sibling conflict over which child plans and pays for care can also enter the picture.

At this point, clients may also start to think about their own longevity and decide to plan for care situations in their own later years. They may hear about LTC insurance as a solution, and approach a trusted advisor or planner for more information on the topic. In fact, the average purchase age for LTC insurance is 59, according to the American Association for Long-Term Care Insurance (AALTCI).

Because long-term care is such an emotionally laden issue, the best approach may be to remove some of the emotion from the planning process and focus on two points:

• There is a good chance that a client, her spouse or her parents (if they are younger) may need extended care at some point.
• If a family member does need extended care, significant financial resources will be required.

If your clients agree on these points, the next step is to consider how to pay for long-term care. Options such as self-insuring, Medicare and Medicaid make sense, as does LTC insurance. What does not make sense are assumptions, such as someone with a net worth of "x" should self-insure. Don't confuse a checkbook with a plan.

If your client wants more information on the government options, the U.S. Department of Health and Human Services has created a website called The National Clearinghouse for Long-Term Care (www.longtermcare.gov). This site has a section called "paying for care," which discusses public financing of care, including Medicare and Medicaid.

LTC insurance is an excellent choice for female boomers in this age group. Here are the primary reasons why:

Underwriting. Because LTC insurance is medically underwritten, healthy clients can use their "health capital" to purchase coverage at preferred health rates. For example, among applicants age 40 to 49, 63.2% qualify for good health discounts. This percentage falls to 51.5% for applicants age 50 to 59, and 42.2% for applicants age 60 to 69. Preferred health discounts may range from 10% to 20%, so over the life of a policy, these are significant premium savings.

Of course, the best reason to use the health discounts to purchase now is that LTC insurance may not be an option if the client's health were to change. Unfortunately, serious health conditions and extended disability due to accidents may occur at younger ages. Early onset Alzheimer's is especially problematic, because someone may live for years and need care during a large part of that time. All tax-qualified LTC policies will cover cognitive impairments such as Alzheimer's.

Age. Similarly, LTC insurance is rated by age, so the total premiums paid over a lifetime can often be less than the cost of waiting to purchase at a later time. According to the AALTCI, premiums and benefits vary widely at different ages:

• Age 55: $1,064-per-year ($4,500 monthly benefit x 3-year benefit period (BP), individual qualifies for preferred health and spousal discounts)
• Age 65: $1,342-per-year ($100 daily benefit x 3-year BP, individual qualifies for standard health and spousal discounts)
• Age 65: $2,998-per-year ($150 daily benefit x 3-year BP, individual is single, standard health)
• Age 65: $4,729-per-year ($240 daily benefit x 3-year BP, individual is single, standard health)

Let's assume that a 55-year-old client decided to self-insure for long-term care by saving the annual premium at a 5% annual savings rate. If this client is in the 33% tax bracket, she would have saved $44,411.33 by the time she was 80 years old. Assuming that the cost of care increased at the same percentage, 5%, the annual cost of care at that age would be $185,402. The years of savings would only pay for about three months of care.