The Wealthy Retiree Part 10 – The Importance of Long-Term Care Insurance

It was another Tuesday as Quaero walked through the door of his very good friend, Will Pecunious, a resident of the complex where Quaero worked as a handyman. Will had spent the last two months teaching Quaero the various lessons of retirement success in rather unique ways. Apparently today would be no different.

Will had created a tremendous house of cards on his kitchen table and seemed to be putting the finishing touches on the elaborate roof when Quaero startled him.

“Wow!!” Quaero gasped with his mouth wide open. “That is absolutely incredible! How long have you been working on this?”

“Oh, about two hours now. It’s become my labor of love.” Will said as he ducked to see the roof at eye level and squinted.

“I brought your Classic Italian sub sandwich. Do you want me to put it on the table?” Quaero inquired.

“No, no…bring it here. I’m starving.”

The old man greedily grabbed the bag containing the sandwich, sat on the couch and began to eat. Quaero, after spending some time admiring the construction, moved to sit next to Will when without warning or cause, the elaborate house of cards collapsed.

Quaeros face was one of shock. Will remained unphased.

“Are you ready for today’s lesson?” Will asked as if nothing had happened.

“What? Your house? All your hard work? Aren’t you upset?”

“Nope.” Will said calmly.

“I don’t understand.”

“That was supposed to happen. The house of cards was built with a poor foundation…on purpose.”

“I should have known.”

“Today, you will learn about the importance of Long-Term Care Insurance.” Will said as he bit into his sandwich.

“Alright.”

“You see, Quaero, if you have saved properly for your retirement, then life insurance and disability insurance are usually not necessary. You now have the assets to cover your lost income if you were to pass.”

“However, the one risk you retain is the risk that you or Maria become sick or need ongoing care. That care is expensive. So expensive, in fact, that it could break you financially in retirement.”

“So,” Quaero interrupted, “Like your house of cards, everything I have worked so hard for could be wiped out due to a poor foundation.”

“Wow, you are starting to catch on quick. I’m impressed that you have been paying such close attention.”

“I have a good teacher.” Quaero winked. “But, I have one other question. Maria and I priced out Long-Term Care Insurance last year and it seemed kind of pricey for something we may not use.”

“First, I hope you are right and you never use it. Nobody buys fire insurance hoping their house burns down. I pray you and Maria go peacefully in your sleep at a ripe old age. However, there is a fairly high chance that will not be the case. The reason these policies can be pricey is because of the relatively high chance that you will use it. The greater the chance you will need to draw on the insurance, the higher the premium. It doesn’t mean it’s not worth protecting Maria from your need at a very expensive facility.”

“Good point!” Quaero replied.

“A good fee-only financial planner can give you a good idea of how much coverage you may require and point you in the right direction when you decide to purchase your policy. So, you’ll have to come back for your last lesson next week to learn just how to find the right one.” Will said as he finished his sandwich.

“It’s a date.” Quaero winked.

Will looked long and hard at Quaero as he smiled. Finally he spoke, “If it’s a date then you’re going to have to buy me more than a sub sandwich.”

The two friends laughed.

Next Issue: Lesson #10: “Information Underload”