Long-Term Care Insurance is a Great Way to Protect Your Assets

LTC expensesLong-term care (LTC) refers to a broad range of services that assist those with chronic conditions, such as cognitive impairment or a need of help to perform the essential activities of daily life (ADLs), such as dressing, bathing, eating, transferring in/out of a bed or chair,  and continence.

A U.S. Department of Health and Human Services report from September 2008 determined that about 70% of people over age 65 will require long-term care (LTC) services at some point, and some 40% will require nursing home care.  It's also expensive.

Data from Genworth's 2017 Cost of Care Survey found the national median cost of an assisted living facility is $3,750 per month. A nursing home costs $8,010 per month. The cost is also typically more for those with dementia. According to the American Association for Long-term Care 2008 Sourcebook, more than half of people needing nursing home care require a stay of more than 12 months, with almost 25% staying more than three years. Those in the latter group, can really wreck a family's finances.

 In addition, most people don’t know that Medicare only covers a very narrow set of LTC costs. Similarly, Medicaid only covers those with very limited financial resources. For all but the extremely wealthy, long-term care insurance (LTCI) is the best solution to defray the expense of home healthcare, assisted living, or nursing home care. Yes, it can be pricey.  Getting coverage when you are relatively young and still in good health helps to keep the costs down.

Some folks are worried they’ll be paying LTCI premiums for many years and die before they ever use the benefit. However,  we do the same type of thing for auto or homeowners insurance. Everyone gets this coverage because the financial risk of doing without is too great.

Insurance companies have combination life insurance/LTCI policies, called "hybrids," that address the fear of wasted premiums. With these hybrid policies, provided that the premium is paid for your lifetime, you or your heirs will receive the full policy benefit, as the life insurance death benefit, the LTC benefit, or a combination.

Reviewing LTCI options can be difficult, because of the number of policy variations. Speak with a fee-only financial planner to review your situation before talking to an insurance agent.

Reference: nj.com (January 12, 2018) “Should we get long-term care insurance?”


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