Hardly Chump Change: Why do Many Financial Planners and Investment Managers Advise their Clients to Self-Insure the Long Term Health Care Risk?
The cost of long term health care for an extended period of time – from a serious injury or stroke, or diseases such as Parkinson’s and Alzheimer’s – can run over a $1,000,000. Further, those costs have been increasing at about 5% a year.
Hardly chump change.
But it’s amazing how many financial advisors and wealth managers still advise their clients to self-insure long term health care – when they would never dream of recommending they self-insure their liability, property, disability, and health insurance risks.
Tempting, as it may be to say that they are dumb, this is not the case – advisors and wealth managers, for the most part, are highly intelligent and pragmatic individuals. So why are they giving their clients advice regarding long term health care that makes so little sense?
The reason, I think, is that they know very little about long term health care – its causes, its costs and its financial and emotional consequences – and even less about the long term care insurance and tax solutions that are now available.
As a result, rather than embarrassing themselves talking about a subject they know very little about, they make it go away by telling their clients they have “enough” money to “self insure” the risk.
What are your thoughts?
