Long Term Care Insurance

At home and in the work force, long term care is emerging as a critical issue. Dealing with long term care needs can be an emotionally and financially significant life event. According to the non-profit National Alliance for Caregiving1 almost 25% of U.S. households (22 million) are already involved in caring for a relative or friend who is 50 or older.

If you haven’t already done so, now may be a great time to consider long term care insurance as part of your retirement plan. Because long term care expenses (the nation-wide average $69,400 or more)² can pose a significant risk to the assets you’ve worked a lifetime to accumulate, long term care should be considered as part of a complete financial plan.

The likelihood is high that you may need long term care. There is a 43 percent chance of needing some form of long term care in your lifetime (almost 50-50)³. And while long term care includes a broad range of services, from in-home care to nursing care, each comes at a cost. These costs could be substantial, and could have a significant adverse effect on your portfolio.

Long term care isn’t just an old-age issue. Anyone could acquire an unforeseen illness resulting in convalescence (i.e. heart attack, breast or prostate cancer, or M.S); or have a car accident. Currently, 40 percent of people receiving long term care services are working-age adults between the ages of 18 and 64⁴. So what happens when someone needs long term care due to illness or accident? Health and medical insurance generally does not cover the cost of long term care. And when income from a job eventually stops, many are forced to live off their savings or investments (while they last). How long would it take before your savings and investments are depleted?

Unfortunately, Medicare doesn’t cover long term care. Benefits for skilled nursing care are limited. Long term custodial care (which emphasizes assistance with activities of daily living such as eating, dressing and bathing) is not covered at all. Medigap policies are not designed to cover custodial care either.

Clearly, long term care can be expensive. Long term care insurance can address this risk. It can help ensure that some of the unexpected costs are taken care of and that family assets are protected. It can enable you to receive care at home or in an assisted-living facility rather than a nursing home. Perhaps most of all, it can help you live out your advanced years with greater freedom of choice and financial security.

In Part 2 of our 2-part series on long term care insurance, we will review what we should look at before purchasing long term care insurance. If you have any questions about LTC, please call our office and ask to speak with one of our LTC specialists.

Sources: ¹“A federal case for LTC.” Employee Benefit News, January 1, 2003; ^{2, 3}2006 Field Guide, National Underwriter Company; ⁴The Federal Long Term Care Insurance Program, 2006.