The Impact of Care on Your Finances
Money and Your Health
Active and Independent
For those that are active and in good health, it is likely that retirement will last many years—increasing the risk of you outliving your money.
Segregated funds for some of your portfolio would help protect from this threat and also provide an opportunity for investment growth. In addition, if the market outperforms the minimum guarantees, the guaranteed minimal withdrawal benefit can be increased. Annuities can also be used for those interested in having their income guaranteed without the responsibility of having to invest the money.
In the future, if care costs increase, then these income guarantees might not be enough. To protect against this, long-term care insurance with an unlimited benefit period will provide additional money for care for a prolonged period of time. For example, if you were to suffer a stroke or develop Alzheimer's—where you would need care for years or even decades—long-term care insurance will guarantee that there is always money to help with this expense and fund any stay in an Alzheimer's care home. To obtain this insurance, the individual must meet specific health requirements, so now is the time to investigate this type of protection.
For those worried about leaving a spouse or children with outstanding debts or a reduced income from government and pension benefits, permanent life insurance provides tax free cash for beneficiaries at death.
Increasing Health Challenges
Over time, there may be a need for additional help as some aspects of living independently become more difficult. It may also be necessary for home health care to be provided by a family member or health care professional. Also, financial planning is recommended; if health declines further, there are still many options and possibly many years of care ahead. If assistive care is needed and long-term care insurance is owned, then you might be able to receive benefits.
To ensure enough income to pay for living expenses, an annuity can be purchased to pay a regular guaranteed income for the remainder of the annuitant's life.
An indexed annuity that provides an increasing benefit based on increases in the cost of living will help meet ongoing increased care costs. Alternatively, segregated funds can be used for the same purpose and provide investment choice. If a permanent life insurance policy exists, the cash value may be borrowed against to provide additional funds.
If your parent or spouse is having a health crisis, there are many decisions to be made quickly. If there is a financial plan in place that has factored in this type of emergency, now is the time to put it into action. For example, if an individual long-term care insurance policy exists, a claim should be submitted immediately for the individual in need of care.
If a long-term care insurance policy does not exist, there are still a few options to investigate. If care will be needed for a prolonged time, purchasing an annuity or segregated funds—with assets from savings or the sale of the home — will protect against the risk of outliving the money. If health has deteriorated, an impaired annuity could provide higher income.
Where a permanent life insurance policy already exists, the cash value can be accessed through a loan to help cover costs. Also, an advanced payout of the life insurance amount is available through many insurance companies for individuals who are terminally ill.
Senior Care Advisor
For more help finding the care you require, consult the Senior Care Advisor. Choose the option that best describes your current health status: Active and independent, increasing health challenges or health crisis. Then follow the links to find the advice and assistance you need.