A few weeks ago, I mentioned how important it is for most 60-year-olds to begin paying for long-term care insurance. Since on average, 60% of people will need to be cared for at an LTC facility during their life, it’s almost always best to buy into some long-term care insurance.
The percentages speak for themselves, but I know there are still some of you out there that still plan on ignoring this long-term care coverage. Because I want to make sure that you understand the full financial impact of your choice not to buy this insurance, I’ve decided to develop a few scenarios for what might happen to your finances if you or your spouse need long-term care.
What If You Never Need Long-Term Care?
Even though the percentages are quite high, there still is a chance that you might never need to utilize the long-term care insurance. For the insurance, let’s say that you pay $250 per month for 20 years and die when you’re 82. You’ve officially never used the insurance, but have paid in all of those premiums! Essentially, you just lost $60,000 over the course of those 20 years.
What If You Have The Insurance and Need To Use It?
Let’s say that you purchased the long term care insurance when you were 62 and 10 years later, your family moves you into an assisted living center and you even up living until 82. Your premiums total $60,000 (just like the example above), but the overall cost of your assisted living would have been $700,000, had you not purchased the insurance. In this example, you come out ahead by $640,000. That’s absolutely huge!
What If You Don’t Have LTC Insurance and Need Assisted Living?
This is the absolute worst example of all. By using the same example as above, if you needed to live in an assisted living center for 10 full years, you’d owe somewhere around $650,000 (the state helps a little bit, but not much)! More than likely, your entire net worth was less than this when you began staying at the assisted living center, so in the end, you own absolutely nothing, and your family is left to pay for your bills.
If you only have 2 kids, they’d have to come up with $35,000 a peice to keep a roof over your head. Oh, and forget about living with your kids. Most couples both work today, which means that one of the spouses can’t watch you 24/7 like you might need.
Can you imagine putting your kids in this position? When you were younger, did you often aspire to have your kids pay for your medical bills and your stay later in life? Of course not! You’ve always wanted to leave them with an inheritance and a legacy of the family name. If you forgo the long term care insurance, you still do have a chance to leave an inheritance, but there’s an even greater chance that you’ll leave them broke. Don’t let that happen to your children!
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.