The greatest fear people have about purchasing any kind of insurance is that they may pay for it and never even need it. Long-Term Care Insurance is no different when it comes to this common anxiety. After all, you are really only protecting yourself from a “potential” risk, right? Many clients say, “I’ll probably just have a heart attack or die suddenly. I’ll never end up needing to go to a nursing home or assisted living facility.” But, predicting the future is never advisable, and proper planning can help protect you and your family from the stress and asset depletion caused by potential long-term care costs.
In fact, of those people who are currently age 65, 25% will need some form of long-term care in their later years. According to the Department of Health and Human Services, 48% of those needing care may spend less than a year in a facility, but the other 50% will likely need 1-5 years of care. It’s a coin toss that leaves you wondering how to place your bet. So, how can you determine whether or not you should purchase long-term care insurance and what types of coverage you should explore? Here are a few considerations:
- Family history. Take a look at your parents and grandparents in terms of aging. Genetics play a role in what your future health needs may be. If your father spent 6 years in a nursing home and your mother spent 3 years in an assisted living facility, it’s likely that you may need some level of care in the future too.
- Cost of Care. The cost of long-term care varies state by state. In the US, the annual median cost of care in a nursing home is $85,800. Can you afford to exhaust your hard-earned assets to pay for this care, or do you want to preserve your estate for your future heirs?
- Your Current Age. The ideal time to purchase Long Term Care insurance is when premiums are still low enough to be affordable, but not too soon that you’re paying premiums for decades. Most advisors recommend making the purchase in your 50s or early 60s.
- Types of Coverage. Traditional or Hybrid? Ask your financial advisor to compare the cost, coverage, and flexibility of the policies in the long-term care insurance market today. While traditional policies typically cover an average daily benefit for a selected number of years, newer policies may offer a mix of life insurance with long-term care insurance, allowing a death benefit for your loved ones and/or access to your balance if you never need long-term care. You may also want to explore policies that offer coverage for assisted living, nursing home, and at-home custodial care. Flexibility is always preferable, but sometimes policies that offer more flexibility can be more expensive too. Review your options carefully before making a purchase.
As always, make sure to approach your financial advisor to openly discuss your concerns about your future long-term care needs. Together, you can develop a plan that addresses your personal and family health history and protects your family and your future. Advisors at Planning Solutions Group are ready to discuss Long Term Care Insurance with you, call us at 301-543-6000.