Other financial planners use words like "unpalatable" and "imperfect" to describe long-term care insurance products. But, despite misgivings, many of them - although certainly not all - conclude that they and their clients should shell out for this kind of protection.
As most financial planners know, decisions about long-term care insurance are difficult. Choosing a provider and a long-term care policy means choosing a plan to live out your last days; it is an extremely emotional calculus.
Add to that the fact that some insurance providers and policies fail to deliver as promised. Then recognize that it is difficult to determine just when it is an opportune moment, in terms of health conditions and life expectancy, to apply for coverage. Is there any doubt why the option of just saying no looks mighty attractive?
Many financial planners, particularly those whose clients have significant assets, do just that when the question of long-term care insurance arises. "It's not for our clientele," says John Przybylski, director of financial planning at Federal Street Advisors in Boston, which has $4.2 billion in assets under management. "They are self-insured."
Przybylski, whose firm serves clients with at least $15 million in assets, says that he hasn't signed off entirely on the notion of long-term care insurance for himself, but that his clients don't like insurance in general and believe that, with this type of product, "there are a lot more unknowns."
But other financial planners say that without $10 million or more in assets, an individual cannot presume that he or she is adequately self-insured for the unknown.
"Given my client population, I lean toward saying, yes, buy long-term care insurance," says Govern, who has $19 million in assets under management. "None of my clients have more than $10 million net worth" - so she believes that none of them could adequately self-insure themselves for the high and ever-increasing costs of long-term care for an extended period without facing significant erosion of their assets.
LENGTH OF COVERAGE
Govern recommends that most of her clients buy insurance to cover two or three years of long-term care - not lifetime coverage. Given its costs, she says, nobody should buy lifetime long-term care coverage.
She concedes that even shorter long-term care insurance products are "very expensive" and "you have to hold your breath," because the industry has a history of imposing steep premium increases. She also notes that the financial ratings of some insurers providing long-term care products are questionable.
Her clients' willingness to follow her advice about buying long-term care insurance varies, Govern says. "It depends on what they have seen their own parents go through," she explains.
Govern recalls one client in particular who struggled with the decision. "I don't know if this is appropriate to ask," Govern remembers him saying before asking if she had long-term care coverage.
The advisor, who is 50, says she told her client "not yet" because she still pays life insurance and long-term disability premiums, but added that she expects to replace those payments with ones for long-term care insurance as she approaches her late 50s.
CHANGE IN POLICY
Laila Marshall-Pence, a registered principal at Pence Wealth Management in Newport Beach, Calif., used to put herself in the camp of financial planners who discourage clients from seeking long-term care insurance. For many years, "I never recommended it," recalls Pence, who has $800 million in assets under management.
But two years ago, an episode close to home prompted Pence to revisit the issue. Doctors recommended that Pence's mother stay temporarily in a private nursing home after surgery to recover.
When Pence visited the long-term care facility to visit her mother, she was appalled. Her mom had been placed in a room with four other women, who all shared one bathroom. The facility's lack of attention to cleanliness was startling, Pence says.
One nurse cared for 19 patients, Pence recalls, adding that her mother was not receiving the attention she needed to recover from her surgery.
Within 48 hours, Pence arranged to have private nurses attend to her mother 24 hours a day. This expensive proposition caused her to realize that, for her own daughter's sake, she needed to structure some kind of insurance that would cover such care for herself and her husband if the need ever arose.