The Foreign Service Journal, June 2021

THE FOREIGN SERVICE JOURNAL | JUNE 2021 53 AFSA NEWS AFSA Webinar The Basics of Long-Term Care and Life Insurance AFSA hosted “AView of Long-Term Care and Life Insurance from the Private Sector,” its third webinar of 2021 on retirement benefits, on April 13. Nearly 200 people attended the Zoom event. The presenters were Stu- art Seldowitz, who spent 28 years in the Foreign Service before retiring in 2011, and Michael Gregson. Seldowitz, now a New York Life Insurance Company agent, talked about the pros and cons of different kinds of life insurance, how much life insurance is enough, and the strategies for using different types of insurance to meet different needs. Gregson, also with New York Life and a long-term care consultant, discussed what long-term care covers and does not cover and how it interacts with Medicare, health insurance and social security. Three Types of Life Insurance Life insurance has a simple goal, Seldowitz said: to help a family overcome the impact of the loss of one of the breadwinners. We all live in a world of uncertainty, and things can happen, he said, adding that life insurance is not for everybody. The impor- tant thing is to plan. He discussed three main types of life insurance: term, permanent and universal. Term insurance has the advantage of being relatively inexpensive, he said, like rent- ing an apartment compared to buying a house. You sign a lease and get a certain fixed benefit that doesn’t change. But when it expires after 15 or 20 years, it is entirely up to the insurance company to set the terms for renewal. Term insurance is used for two main reasons, he said. Some people have limited resources and don’t want to pay the higher cost of permanent insurance. Others might purchase it if they have a temporary need, such as 15 more years to pay off their mortgage and want their spouse to be able to do so should something happen to one of them. Permanent insurance, in contrast, is like buying prop- erty, he said. It’s more expen- sive in the short-term. But like buying a home, people who buy permanent life insurance are building equity; also, the premium is fixed over time. The policy also has a cash value, which you can withdraw or borrow against to buy property, pay down debt— whatever you want. Permanent life insurance is also not reachable by divorce or financial predators, he said, and universities are prohib- ited from considering the cash value of life insurance when making decisions about financial aid. Universal life insurance is a flexible product that can be used for estate planning or for special needs children, he said. Ins and Outs of Long-Term Care Long-term care has become more expensive over the years, Gregson said. People are living longer lives; and as a result more people are experiencing dementia and other health problems for longer periods of time. And by the time people who are now planning for long- term care need it in a few decades, the costs will be a lot greater, he said. In the New York City area, one year of home health care costs $52,000 on average, he said, while a year in an assisted living facility costs $80,000, and a year in a semi-private room in a skilled nursing facility averages $143,000. “My advice is to educate yourself on what the options are,” he said. “Everybody does something different. It’s not a one-size-fits-all situa- tion.”The goals are to protect assets and to make sure family members don’t need to become caregivers. People can buy coverage for a specific number of years’ worth of benefits, and a spe- cific amount of benefit. On average, he said, women who receive long-term care benefits from New York Life use them for 3.7 years. For men, it is 2.5 years. That includes the range from home care to nursing home care. Taking questions from the audience of nearly 200, Gregson said that Foreign Service officers with a pen- sion probably won’t qualify for Medicaid long-term care. For people who retire abroad, most plans will cover about 100 days of care over- seas. A hybrid life insurance/ long-term care plan does cover a year of long-term care overseas. Members can view video of the webinar at afsa.org/ video. n SCREENCAPTURE SCREENCAPTURE Stuart Seldowitz Michael Gregson