Do I need Long Term Care Insurance?

As medical technology improves, people are living a lot longer.  Unfortunately it is not always because they are healthier, eating properly, or doing what they should be doing.  The fact is medicine is helping to keep them alive longer.   When people reach a certain point their bodies are just too frail (or their minds are too frail) to take care of themselves.  At this point they often end up being cared for by their children, or by a nursing facility.  In today’s society children often do not live near their parents, thus they are unable to care for them (if they even would want to).  Instead the parents end up moving into a retirement or nursing home.  And these facilities can be very expensive.

Statistically speaking those who are over age 65 have a 50% chance of needing long term care at some point in their life.  As people get older, the odds of needing care just keep increasing.  For those who do not have insurance that will protect their finances and pay the cost of care, they will be stuck paying the full cost of care out of pocket.  At today’s rates, that means anywhere from $100 per day to $250 per day, depending on the location, type of care and the facility.   10 years of paying these costs can tear through anyone’s retirement nest egg in a hurry.

The costs of care just keep increasing too.  While inflation increases the price of most good at about 3% per year, the cost of long term care rises at about 5% per year.  So what costs a lot now will cost a whole lot more in the future.

Generally long term care is considered something that seniors will need.  Most people do not move into nursing facilities, or have in-home care, until they are well advanced through their retirement years.  However, this policy will kick in regardless of when the person needs the care.   Like disability insurance there is a waiting period, usually 90 or 180 days.  This makes sure that the insured is not claiming a need when he or she is simply out of commission for a few days.  After the waiting period the insurance company will analyze the need for long term care.  Usually if the insured cannot complete 3 of 6 activities of daily living (ADL’s), then there is an actual need for the care.  These activities are dressing, bathing, eating, continence, toileting, and transferring (getting in and out of bed).  Many policies will require notice from a doctor or medical facility before approving a claim.

Since most people would rather stay in their home than move to a facility, they do have options with long term care insurance.  Most policies will cover the cost of in-home care as well as nursing care.  This keeps the insured comfortable, and often will live a lot longer.

Most people will need some sort of long term care.  Whether they decide to pay out of pocket, rely on Medicaid, or purchase an insurance to cover the costs is up to them.  The biggest benefit of the insurance is that they get to protect the assets they have worked their whole life to accumulate.  Nursing facilities are expensive and only getting more expensive.  But what might be even more important is the insured’s ability to choose his or her own care provider.  When relying on Medicaid, the patient goes to whichever facility Medicaid decides.  When using their own money or insurance, the patient gets to decide.

This insurance is not for everyone.  Some of you may be wondering when is the right time to buy insurance.  If you are between the ages of 40 and 70 (after that age it get very expensive), have assets you wish to pass along to heirs, and would like to have choices in your care provider, it may be time to look closer at long term care insurance.  Just be sure to find a trusted advisor that will help explain the insurance thoroughly.  And understand what you are getting before deciding to buy it.

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