Protect Your Future with Smart Planning

Physician's Money Digest, November30 2003, Volume 10, Issue 22

After saving for years to preparefor retirement, the lastthing you want is to haveyour funds drained by long-termcare costs. If you take the time nowto plan ahead, you will have more opportunitiesto accumulate assets and can resta little easier knowing you're prepared.

Long-term Care Basics

Simply put, long-term care is the assistanceyou might need in the event of aprolonged illness or disability. The termencompasses a wide range of medical,personal, and social services that helppeople meet their basic living needs. Thiscare can be received in the home or at along-term care facility. The following listdescribes the 3 primary types of long-termcare available:

• Custodial care. This helps individualswho only need assistance with dailyliving activities (eg, dressing and cleaning)that they can't perform themselves. Thisassistance may be given in the home.• Intermediate nursing care. Designedto assist people with stable conditionswho still require daily supervision andmonitoring by a skilled professional,intermediate nursing care may be given inthe home, with several nursing and supportvisits per week.• Skilled nursing care. This type oflong-term care is for people with medicalconditions who require round-the-clock,highly trained, professional help. Skillednursing care is received in a medical facility,and usually requires an extended stay.Retirement Preparation

If you don't have enough money setaside in advance for long-term care, youmay resort to using personal or retirementsavings to cover the cost. Therefore,you need to begin planning now so thatyou're prepared. To avoid depleting yournest egg on extended care, consider thefollowing value-leveraging options:

• Long-term care insurance. Mostlong-term care policies will pay you a taxfree,fixed-dollar amount per day for nursinghome or home health care in exchangefor a monthly premium. This insurance isdesigned to protect your lifestyle duringretirement and give you a little relief fromthe high cost of extended care.• Specialized life insurance. While thisunique type of life insurance is slightlymore complex, its basic advantage is thatit adds a living benefit. If you qualify forextended care, this benefit is availableimmediately to pay for covered services,and any unused portion can be paid toyour beneficiary income tax–free.Joseph F. Lagowski is vice president,investments, and a financialconsultant with AG Edwards inHillsborough, NJ. He welcomesquestions or comments at 800-288-0901 or www.agedwards.com/fc/joseph.lagowski. This article was provided by AGEdwards & Sons, Inc, member SIPC.