Long Term Care Insurance to Protect Your assets
Why Long Term Care Insurance?
BY KARIN PRICE MUELLER
 George and Liza have two primary goals: George's retirement this year and funding their daughter's
wedding within the next two years.
"With the inflation and health care being so expensive, will I be able to survive with all our anticipated expenses
?" George asks. "We would like to travel, as that is our hobby. We would also like to leave as much as we can for our children
George and Liza, whose names have been changed, have so far saved $237,588 in George's 401(k), $828,271 in IRAs, $195,019 in mutual funds, $262
,365 in a brokerage account and $200,000 in bonds.
The Star-Ledger asked Paul Knodel, a certified financial planner with the Knodel Group in Princeton, to help George and Liza analyze their retirement
prospects.
"George and Liza live well below their means and do not expect any increase in spending when George transitions to retirement later this year," Knodel says.
Knodel ran a Monte Carlo simulation of their current situation, which looks at thousands of "what-if" scenarios for the couple's finances. It showed 85
percent probability of success, meaning they will not outlive their assets.
Because George plans to retire this year, Knodel says there's no need for a
personal disability policy, and he also says there is adequate life insurance. Knodel says George should review his group life policy from his employer
before he retires to see if there is a convertibility clause, which could enable him to convert the policy to a term life policy at prevailing market rates without
having to have a health exam. This is an excellent strategy to retain insurance whenever you separate from service, he says.
George and Liza do not have long-term care insurance, but Knodel says they
should consider buying a policy. He ran one scenario that shows projected long-term health expenses in excess of $1.5 million should George require
nursing home care at the end of his life. For Liza, the projected expense would be $2.6 million, should she require it. Knodel says a policy with a $150
daily benefit in today's dollars covers $363,000 of George's expense and $474,000 of Liza's expense.
"While the projected growth of the overall portfolio shows adequate assets to
cover this type of expense, they should certainly consider long-term care insurance as a part of their wealth preservation strategy," he says.
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