Plan for Long Term Care for a Dignified Retirement

Craig Harding, managing director of Altrisk

We all dream about a retirement filled with foreign travel, the joy of grandchildren and carefree days far from the trappings of a frenetic work schedule and the responsibilities that come with raising a family. We all believe that we will lead better lives once we retire and hope that our health will allow us to fulfil all the dreams and leisure activities we’ve delayed doing.

Many people do. But many don’t! Key to a sound retirement is solid financial planning that takes into account all the eventualities that life can throw at us. “Generally retirement planning begins as soon as one starts working by setting aside money in retirement annuities, pension schemes and various savings policies. But even the best laid plans can be derailed by unforeseen life circumstances. Given the statistics around lengthening life expectancies, it’s not unrealistic for a number of us to be to be ‘retired’ for as long as we have worked. Couple this with the higher risk of serious illness or chronic disease and a lifetime of retirement savings can evaporate very quickly,” says Craig Harding, managing director of Altrisk.

“Financial advisors need to be prudent in getting clients to take a critical look at whether they – and their families - are really financially prepared for the medical expenses and the costs of having home or facility care in the event of a prolonged or permanent illness. Given the already severely overburdened and strained public healthcare system, chances are that a bad turn in a client’s autumn years could leave them dependent on their spouse, children, grandchildren or other relatives who may not be in a financial position to support them,” warns Craig. “Home or facility care costs money and depending on the facility and the level of care needed, it can cost significantly more than their retirement savings allow for.”

Altrisk’s newest benefit – Long Term Care – caters for this exact eventuality. Bene?ts are payable after 65 and may be paid either directly to the insured or ceded to a care provider. Children who have a particular interest in supporting their parents in need of care can take this cover out on behalf of their parents. In addition, a death benefit is available before or after the life insured’s 65^th birthday.

“Long-term care insurance is designed for policyholders while they are alive and in need of care, giving them the flexibility and freedom to preserve their assets, lifestyle and dignity. It’s a benefit that makes the golden years that much more manageable no matter what life throws at them” concludes Craig.

Long Term Care in a nutshell:

· The policy can be ceded to the long-term care provider
· It pays a monthly benefit on the need for long-term care
· The benefit can be taken out by the children of the insured
· It offers a death benefit before and after age 65
· Benefits are payable while the insured is in long-term care after the age of 65 having met the impairment definition. Impairment means the inability to perform 3 or more activities of daily living.
· Long-term care means full-time care with a registered frail care facility, hospice or nursing home, or with a registered medical professional, on a contractual basis
· Full-time care includes direct supervision and assistance for at least 25 hours a week
· Partial benefit payments are paid where care is less than 25 but more than 5 hours a week on a proportional basis

 At a glance:

· Maximum cover amount: the lower of 100% of previous earnings or R30 000 per month
· Waiting period: 1 month
· Term: For life
· Min entry age: age 19 next birthday
· Max entry age: age 60 next birthday
· Guarantee period: 5 years (fixed) or experience rated
· Voluntary escalations: 0%-15% of premium or benefit
· Claim escalation (optional): CPI (maximum 10%)
· Premium pattern: Level or 5% compulsory premium escalation
· There is one general exclusion — self-inflicted injuries
· The benefit is available as a stand-alone or ancillary benefit
· Premiums are payable during the waiting period but are waived while claim payments are being made.
· “Previous earnings” refers to income at the time of taking out the policy
· For death before age 65, the amount payable is equal to the premium for this benefit at date of death x the number of months the policy has been in force.
· For death after age 65, the amount payable is equal to twice the monthly benefit sum insured