Long Term Care Planning: The Hammer and the Nail

You‘ve most likely heard the phrase, “If all you have is a hammer, everything looks like a nail”— an oft-quoted gem from Abraham Maslow’s “The Psychology of Science,” published in 1966. It points out a common procedural weak link:  over-reliance on a familiar tool for every purpose, often without even considering other options. We prefer to make do with what we have rather than looking in our toolbox for a better alternative. However, whether you’re going to build a house, or just a dollhouse, it’ll take more tools than a hammer—although a hammer is, of course, essential for either project.

The same line of thought applies to building a Financial Plan. There are more tools needed to complete your plan than just investments or Long-Term Care Insurance, even though both are important tools commonly utilized in Financial Planning.

Let’s take a look at some of the items in the toolbox that skilled planners use when developing a Financial Plan: software calculators, financial vehicles such as short-term and long-term investments, life insurance, disability insurance, etc. One vital tool in that kit is a Long-Term Care Product that may be implemented after considering whether an extended health care event would impact your financial future. If it is determined that the best solution is to transfer some or all this risk to an insurance company, often a Long-Term Care Planning Specialist is brought in. An LTC Specialist is called in because there isn’t a one-size-fits-all Long-Term Care Plan that will solve the problem of losing one’s independence.

Whatever the solution might be, not having a Long-Term Care plan in place, not being prepared, jeopardizes the foundation of everything else you have planned for. If you use a Financial Planner to guide you in planning for your financial security, the planner utilizes software tools and calculations to predict potential outcomes, thus guiding you in setting up a PLAN to achieve the desired goals you have for your future financial security.

The planner includes calculating what effect a long-term care event would have on this outcome.  This helps them recommend whether to strategize with a Long-Term-Care- Planner.  The term  “Long-Term Care Plan” does not refer to ONE specific set product type, benefit plan, or design. If the Planner’s calculations suggest some transfer of risk should be considered, this recommendation brings you to a Long-Term Care Planning Specialist who will analyze, assess, educate, and make recommendations for options that will correct the potential weakness in your plan.

If, on the other hand, you were to approach Extended Health Care planning in a single-minded manner, i.e., separate from the Financial Plan, you’d be relying on a false assumption. The indiscriminate negative bias that currently exists vis-à-vis Long-Term Care Planning must be reversed. The lack of proactive planning causes delays that could jeopardize financial security.

For Financial Planners, having the conversation introducing the need to have a plan, does not the problem solve. The Planning Process includes conversation, assessment, education—and most importantly, the Follow-Through—until a decision is made and a plan completed, OR it is determined the Plan will be to self-pay. Remember, to self- pay means you are not transferring any of the risk, you are paying for all expenses yourself, which could completely deplete your assets. Ask yourself, “What is the cost of doing nothing?”

If I could use a hammer, it would be to pound in the importance of the follow-through: Follow through with communication, follow through with plan considerations, follow through with getting clients to decide, follow through until the JOB (of planning for your clients) is completed. You would not build a house and not include the electricity, nor should you build your Financial Future without including protecting it against a potential extended health care event. Complete the Plan.