Do we really need long-term care insurance?

What will happen to my family if I:

  • Become severely ill
  • Cannot care for myself
  • Suddenly die

Why Healthcare Costs Will Make You Sick

  • The 7 things you MUST know before buying Long-Term Care insurance

Six ways to pay for long term care insurance

Self-Insure

Learn more about self-insured.

Medicare/Medicaid

Learn more about medicare, medicare advantage, and medicaid.

Veterans Administration

Learn more about VA Benefits.

Traditional Long-Term Care Insurance

Learn more about traditional long-term care insurance.

Long-Term Care Annuities

Learn more about long-term care insurance with an annuity.

Long-Term Care/Life Insurance

Learn more about long-term care insurance with life insurance.

Self-Insure

This means pay for it yourself.  If you have enough savings or a robust retirement income, this is a viable option. However, the cost of long-term care ranges from $40,000+ for a part-time, custodial, in home aide to $100,000+ for a skilled nursing facility. This doesn’t cover possible ancillary medical costs or other living costs you and your spouse might incur as well. Current overall healthcare inflation is between 5%-15% depending on the product or service. Either way, it well out paces the current rate of 1.7%. Even with millions in savings, your funds will quickly diminish.

Medicare/Medicaid

You might believe if your investments are insubstantial enough to cover long-term care, the government will fund it. The short answer is maybe. But there are limitations to what services and how long the government will pay for care. And the paperwork to apply is perhaps even more daunting. Full coverage of long-term care is only provided to those who are completely destitute. And facility choices are limited with government reimbursement options because most prefer not to accept them as payment. Even without other challenges to contend with, these factors alone could result in inadequate care.

Veterans Administration

First and foremost, you need to have served in the military and have an honorable discharge. So only eight percent of the current population is eligible for this. It is important to note, the VA does not pay for room and board in residential settings such as Assisted Living or Adult Family Homes. The VA provides nursing home care if you meet certain eligibility criteria involving your service-connected status, level of disability, and income. The VA will not provide care for your spouse.

Traditional Long-Term Care Insurance

This is a lot like the insurance you might own, such as auto or healthcare insurance. You pay a premium. In return, the insurance company will pay a professional to assist you with your problem. Long-term care insurance will pay for services such as home-based treatments and assisted living. This usually provides the most value in terms of premiums paid to benefits paid out. Premiums are tax deductible. And many states will offer additional financial protection if you own one of these policies. However, the underwriting is stricter and requires you to be in good health without preexisting conditions to qualify.

Long-Term Care Annuities

Annuities have been scrutinized by the media. And in some cases, rightfully so. However, they still can provide you with a way to pay for long-term care. Annuities can provide monthly payments to those who have been denied long-term care insurance for health reasons. There are also some circumstances where this may be a simpler option than traditional long-term care insurance since it may not require a medical examination.

Long-Term Care/Life Insurance

This is a relatively new product in the marketplace which has become increasingly popular in the past 10 years. As a result, these long-term care/life insurance policies (also called hybrid or linked benefit policies) are changing often. Insurance companies developed these for those who were concerned about purchasing long-term care insurance yet never utilizing the benefit. Hybrid products like this ensure your premium is returned. The premiums are guaranteed never to increase. Of course, these additional features result in more expensive premiums.

Frequently Asked Questions

Insurance is a waste of money.

Although statistically people between the ages of 18 to 39 are less likely to die or become critically ill, they will eventually happen. Care in a nursing home is unlikely for someone in that age range. However, if you have a family or loved ones, life insurance with a long-term care rider is much cheaper when you are young.

I’m healthy. Insurance is a waste of money.

Premiums can be expensive. However, new medical technologies and medications are priced over $1,000,000 per treatment. Lengthy hospital stays and long-term care facilities can also cost hundreds of thousands of dollars if not millions. And 2/3 of all bankruptcies are related to healthcare costs. And if your read our article about healthcare costs, you will understand why prices will continue to rise.

I get long-term care insurance benefits from my employer. So, my family and I are adequately covered.

Have you ever considered how much it would cost to be in a rehabilitation center or nursing home for months or even years? Although some employers offer life and long-term care insurance, often times it isn’t enough to keep your loved ones financially secure. In the event you have a catastrophic illness, long-term care coverage will pay for your care, so your family doesn’t have to make that financial sacrifice. You might need to consider a policy for your spouse or other dependent adults too. Most employers do not cover this for family members other than the employee. Also, you lose coverage when you change jobs and replacement insurance costs more as you age so It’s a good idea to have a policy that is not connected to your job especially when you are young and it is cheaper.

I am too old to buy long term-care insurance.

Maybe. There are age restrictions with some policies. However, many people buy policies in their 50s and 60s. And even if you have pre-existing conditions, some insurers will still issue a policy to meet your needs.

I can purchase long-term care insurance later.

Unfortunately, in this case, bad things can come to those who wait. Waiting could cause you to miss your opportunity to protect your family and your wealth. There are many options available and it is worth looking into one that may be right for you.