We don’t like to think that we might become frail and impaired in our old age. The reality is that due to longevity, we will live to be older than our own parents, and there will be a huge probability of becoming frail and impaired.
The biggest concern about being frail in your old age, is that you will need to be taken care of. Due to the cost of frail care and carers for the aged, most elderly people stay with their children. This can be a burden to them, and they might not have the necessary finances, qualifications or expertise to look after you.
It is important to know that there is a difference between medical care and frail care, and while your medical scheme will pay for your medical care, it will usually not pay for the care you need when you are unable to manage the normal activities of daily living without assistance.
By not insuring yourself for a lump sum, an income or setting aside your own savings for possible future long-term care needs, you are left exposed to the risk of not having sufficient funds.
An assurance policy may not be the cheapest way to provide for your long-term care needs, but it will probably be the most appropriate form of protection.
There are several financial risk products that can offer you cover in the event of becoming impaired after age 65.
Hollard Life has a Long Term Care policy that pays an income of up to R30 000 per month if you are admitted to a registered frail care, hospice or nursing home facility, or if you can’t do three or more activities of daily living (such as eating, bathing, dressing and going to the toilet) and need direct supervision for 25 hours of the week. The highest age at which you can take out the cover is 60.
Many life assurers offer what is known as a whole-of-life option on their income protection and disability policies. This means that, instead of taking out income protection or disability cover that pays out in the event that you are unable to work up until retirement only, you keep the cover in place until you die. After age 65 you would be covered for impairment events.
Another policy that may offer some protection against the costs of long-term care is a critical illness policy, which typically pays a lump sum on the diagnosis of a critical illness. It is important to check that the critical illness policy include cover for diseases like alzheimer’s, dementia and parkinson’s disease.
Please speak to your Ultima Financial Planner if you are concerned about your own Long Term Care needs.
Personal Finance: Financial products can ease the burden of long-term care – 17 September 2016 by Laura Du Preez.
Personal Finance: Personal Finance: Frail Care: What you should know – 19 Mei 2015 by Laura Du Preez