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Do You Need Long Term Care Insurance?

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Have you even heard of long term care insurance? To be honest, I don’t think I even knew this insurance existed until quite recently (I am still fairly young and my elderly years aren’t the first thing on my mind).

Basically, long term care insurance is for those that want to ensure themselves against the high cost of elderly care. Have you ever looked into the expense of elderly care? Often times, it can be more than $100 a day (and probably much more in some cases)! How long will it take for your savings to diminish? Every year, $36,500 will be deducted from your account, and that doesn’t even count the additional expenses of every day life! Will you have the necessary funds for that? Will you live longer than your money? Kind of a scary concept isn’t it?

For this reason, long term care insurance was created. Before you quickly brush off this insurance, consider some other investments that you currently have insured – you know, your house. Do you know what the odds are of your house being completely destroyed? 1:1300. Chances are, your house will be fine, but you spend money on insurance every single month don’t you? Why not insure your future care? After all, the chances that you’ll need long term care are not 1:1300, they are 1:2!!!

Do You Need Long Term Care Insurance?

Just like anything else, it depends. If your net worth is over $3,000,000, chances are, you won’t run out of money after retirement (some passive income avenues wouldn’t hurt either by the way). So, you can ignore this entire post and keep your money safe. You might need it later in life.

If, at the time you need care, you have less than $100,000 in savings and investments, and you have a low income, you can most likely qualify for Medicaid benefits, which will cover many of your long term care costs. However, Medicaid can often limit your choices for care. If you go this route, you may not have quite as much fun in your low-budget facility.

Now, what if you’re in between $100,000 and $3,000,000? I’m sure most of us fall in this range, and if you do, you are a likely candidate for long term care insurance. By paying a monthly amount to the insurance company of your choice, you can guarantee yourself a lovely care facility if you should need one. Some of these coverage plans only allow you to receive benefits for up to 5 years, but others will continue to pay you for an unlimited time. Make sure to watch the fine print.

How much does long term care insurance cost?

Again, it depends. This time, it depends on your age. Just like life insurance, the monthly premiums increase with age. If you are in your low 50s and have fairly good health, you can expect to pay around $1,500 per year for this insurance. But, if you are in your 70s, you might have to pay something like $2,500 a year. I know this seems like a lot, but do you remember how much it could cost for one year of care? $36,500. With a few years of long term care, the amount you paid in will be peanuts in comparison.

Take a look and decide for yourself, but understand that it’s a great option for those that do not want to burden their loved ones with a hefty monthly bill from long term care. If the rates look good to you, then go for it! If they do not, just make sure that you have some other plans in place.

What do you think about the long term care insurance plan? Do you think that you’ll ever sign up for a policy?

Money Retirement

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

15 Comments

  1. My wife and I bought it several years ago. I saw first hand my mother’s assets depleted by long term care at over $6K per month.

    • Yep, I’ve witnessed the same thing, not with my parents, but with other relatives. It’s sad to see all of the money vanish after a lifetime of saving.

  2. I think it’s well worth the money. The annual cash you have to pay is covered big-time by the safety and security of having a better “I need this much” number for retirement savings.

    If $2,500/year can rid you of one of the worst risks to running out of money, I’d say it’s $2,500 well spent.

    • If you are within that $100,000 and $3,000,000 window, it is something that should be thought about very seriously.

  3. I too have not heard of this long term care insurance, thanks for the info.
    May be I have to think about this insurance seriously as i have seen my parents suffer a lot due to debt.

    • Yep! It’s not a super exciting topic, but it is pretty important when you start reaching your retirement years.

  4. @JT & @Krantcents-So true. My dad is in a home and the cost is unbelievably high. Makes me a believer!

    • Yep. Sometimes that long term care insurance is a good thing to have, especially if you don’t have a whack-load of money sitting around.

  5. jsut like you, i’ve not heard about this insurance .. definitely something to think about. with rising prices happening, this could be a life saver when my time comes. thanks for the info!

  6. It’s hard to want to shell out $3,000 or more a year per couple in insurance premiums for something we most likely will never use. Over twenty years, that’s a lot of premiums.

    I personally would do it because I’m a worry wart, but my husband is not a fan of insurance products so I can’t sell him on it.

    • Yep. For the best cost effectiveness, the experts say to start looking into this insurance in your late 50s, but you’re right. Chance are that you won’t need to cash in on it until you’re in your seventies. That means you might pay in $50,000 or more on the insurance, but with medical costs on the rise, I’d say that will be pennies considered to the future cost.

      Also, the odds of one of you (you and your spouse) needing care is 1 in 2! So, I wouldn’t say that you’ll most likely never use the benefits from the long term insurance policy. Chances are, you WILL use it.

  7. Knowing that i will be taken care of is worth the cost of the insurance. The piece of mind is priceless.


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