In our upcoming issue of On Wall Street, one of our feature stories focuses on how advisors can help their clients structure their finances in the event of a debilitating illness that affects either the client or their spouse or another family member.

As the U.S. population continues to age, this is a topic that is going to be on the top of the agenda for advisors more and more. After all, if a client’s spouse has been diagnosed with cancer, how does everything change? How do you talk to the client, the spouse and perhaps other family members?

In our feature story in November, our writer discovered that too often advisors rely on a blanket solution that doesn’t address the specific needs of a specific illness.

So, advisors, recognizing that illness and disability is going to become an aspect of financial planning more and more have to adapt; they have to acquire skills and a network of experts that can help them create the type of portfolio and other vehicles (such as trust) to address the needs of clients facing these difficult realities.

Whether it is nursing home or some other type of aid to address a chronic illness, the costs are significant, according to a May research paper entitled by Wei Sun, Anthony Webb, and Natalia Zhivan, who are researchers at the Center for Retirement Research at Boston College. They write that: “The expected present value of lifetime health care costs for a couple turning 65 in 2009 in which one or both spouses suffer from a chronic disease is $220,000, including insurance premiums and the cost of nursing home care, and 5% can expect to spend more than $465,000.”

The researchers also note that currently healthy retirees are unaware that they could pay even more than those who have a family with a chronic illness, primarily because they will live longer and have to pay for nursing home costs.

The researchers offer this solution: “Households planning for retirement need to decide how much to set aside for health care costs and whether to purchase Medigap and/or long-term care insurance. Those currently in good health would be unwise to infer that they will continue to enjoy lower than average health care costs. The reality is that even the currently healthy can expect to eventually suf­fer from one or more chronic diseases, which often results in high out-of-pocket and long-term care costs.”

That said, maybe it is time for the industry to recognize that a new need has arisen to create financial plans by illness and disability at different levels of client wealth. 

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