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Demand rising for long-term care insurance
HOLLYWOOD, Fla. (6/23/08)--With the need for long-term care remaining the greatest unfunded liability a person can face in retirement, long-term care insurance is one of the most sought-after executive benefits today, attendees of CUNA Mutual Group’s Discovery Conference were told Friday.
Michael McNerney, senior long-term care specialist, CUNA Mutual, discussed how long-term care can act as umbrella protection for a person’s accumulated benefits at last week’s Discovery Conference in Hollywood, Fla. (Photo provided by CUNA Mutual Group)
Long-term care involves a variety of services that helps meet the medical and non-medical needs of people with a chronic illness or disability who cannot care for themselves for extended times. Other significant risk factors are covered by various forms of insurance--health, home and vehicle--but long-term care is not widely insured. Yet the need is real and growing, said Michael McNerney, senior long-term care specialist for CUNA Mutual. “As many as 70% of people over age 65 receive some home care, and the average cost of nursing home care is $195 per day,” said McNerney. “An unexpected need for long-term care, either for the executive or a family member, can virtually wipe out an entire lifetime of savings.” Credit unions faced with increased competition for talented key executives can offer long-term care as part of an executive benefit plan. “Long-term care is an innovative benefit that is becoming expected. In a 2001 survey, 17% of respondents included long-term care insurance in executive benefit packages. By 2007, that number rose to 27%. An increase of 10% in that timeframe is extremely significant,” McNerney said. Yet the majority of credit unions today do not offer long-term care insurance. This is a concern, McNerney said, because most retirement projections do not take the possible need for long-term care into consideration. “For the executive, long-term care insurance completes a lifetime of retirement planning, acts as an umbrella of protection over other accumulated benefits and provides for the entire family if care is needed,” McNerney said. “For the credit union, long-term care insurance can be used as a tool to reward and retain key executives, is a flexible benefit component and costs only pennies on the dollar,” he added. The federal government is taking steps to encourage workers to invest in long-term care insurance by setting favorable tax treatments of long-term care benefits. The benefits are not taxable as income and the premiums may be deductible as a medical expense. The government has set these tax advantages to help relieve a strain on Medicare, Medicaid and Social Security, McNerney said.
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