Can You Afford Long Term Care Insurance? Can You Afford NOT to Have It?

When it comes to Long Term Care Insurance, many people feel that the cost does not equal the value. Yes, it can be a costly monthly payment, but can you put a price on the care that you or your loved one receives when they need it most?

For years, my husband and I understood the importance of Long Term Care Insurance.  However the cost was a deterrent, while we were putting our children through four years of   University.  Working in the industry, I have always been a big believer in the value of long-term care insurance. I always felt it was something that we would have to do as soon as possible.  Many of us will live into our 90’s. I think it is reasonable to believe that one day we may all need help. Maybe it’s help in our homes—someone to assist with cooking, bathing, dressing, etc. Many will need more help and chose to move into an assisted living or nursing home, instead of bringing someone into our homes. Either way, the cost of care is very expensive, and it will continue to increase at a rate that is higher than the inflation rate.

This is why it is so important to consider long term care insurance now. Who is going to pay these costs, when you need them the most? Certainly not Medicare!  All of us have home insurance to protect us from any damage that can occur to our homes. We have auto insurance to help us in the event of an accident or injury in our cars. Doesn’t it make sense to have insurance that can provide the support, care and comfort if you become too ill, sick or old, to care for yourself?

Long Term Care Insurance policies have changed throughout the last few years, as premiums increased to cover the anticipated cost of care. You should also keep in mind that your monthly payment will also increase as your age increases. This is because the older you are when you take LTC insurance, the fewer years  you have to pay into it, before you have the need to use it. If you are fifty years old, or older, now is the time to consider if long term care is for you and if so, act on it to lock in your eligibility while your health is in “good standing” and you’re insurable.

I understand the shock, and the financial burden you may think paying this premium might have on your lifestyle.  However the importance of it, to not only protect myself when I am elderly, but just as important is to protect my children. Making sure my welfare does not burden them or affect my own assets, far outweighs the cost. I encourage you to try and think through your options. Contact a Long Term Care Specialist so you understand all that you need to know. Also, have them explain to you just how the particular policy that you are looking at works. When I consulted a specialist, he gave me a small chart that made a large impact on my thinking.

For example, a policy that has an annual premium of $1,800 a year, and you have paid that premium for five years, in essence means that you have already “pre-paid” for 50 days of coverage.

Some clients considering long term care insurance are concerned that the benefits of coverage may not be worth the cost in premiums paid. This example above, shows how the benefits you receive have been prepaid by the premiums you have already paid out.

One important fact to remember is that when you are 90+ (or even 75+), you are most likely not working anymore. To find the $50, $75 or $100 a day to pay for care will be much harder than if it has already been pre-paid through your LTC insurance premiums you have paid when you were much younger, and working.

The table below shows the number of days of receiving benefits until you have received back all the money you have paid in premiums. At this point you have “broken even” and any further benefits are over and above your cost of insurance.

 

Years of Paying Premium Days Covered By Premium Already Paid
1 10
5 119
10 193
15 279
20 379

 

If you take your monthly policy premium and break it down to a weekly payment, the premium will hopefully seem doable. This is especially true if you put your mind to it.  An $1800 yearly premium broken down to weekly payments, becomes $34 dollars a week. If it is important enough to you, I believe you can find a way to free up $34 dollars a week to ensure your well-being in the near future.

I know this may not be as easy as I make it seem, but trust me, it is one of the most important decisions you will make. If you are thinking that it is still not doable, talk with your children. Your kids will be thrilled to help cover the premium now, so they don’t have the full burden of paying for your care later.  Look at this from their perspective: they can help you keep this valuable protection today, or they can face a future that they may eventually end up needing to step in and pay for the care you may need later on, out of their own pocket. That would most likely cost a lot more than helping you with today’s premium. There are many “hybrid” policies that are now available- A new generation of long term care options for us baby boomers just ask your long term care insurance specialist or financial planner.

There a few certainties in life, but getting older is definitely one of them. Wouldn’t it be nice if you knew that you have done everything in your power to plan for the unexpected?

 

2018-09-05T21:34:27+00:00