long term care insurance

Long term care insurance: Who needs it anyway? 







 
How do I know if I would be a good candidate for long-term care insurance?

Long-term care insurance is a gamble, as is the case with most insurance. If you end up needing years of supervision and care, then long-term care insurance was a good buy.  If you die suddenly, never using any sort of personal or nursing care, than it was a waste of money.  And you always need to remember, that no policy covers all of the cost.  There will always still be some bills to pay even with long-term care insurance. 

As you or your loved ones begin to consider long-term care insurance, you should beware of pushy salespeople and scare tactics.  The costs are high and the fear is great, so make sure not to buy in a panic.  Many people simply should not bother with purchasing long-term care insurance.  Agents get enormous commissions (often 50% of the first year’s premium and another 10% for every year after that) so they have plenty of incentive to sell these policies. You need to think long and hard before considering this as a worthwhile investment. 




Long-term care insurance helps to protect assets and preserve the inheritance for heirs.  However, it’s very expensive and never covers the full cost of care.  So, who are some of the individuals who should consider buying a long-term care insurance policy? 

Individuals with ample assets. The primary reason to buy long-term care insurance is the protection of an individual’s assets in excess of the cost of long-term care.  If your parent or loved one is believed to become eligible for Medicaid within approximately 12 to 18 months of entering a nursing home, you should probably not consider this as a viable investment.  Nursing home costs vary significantly from area to area, so you should look at the cost within your specific area.  Just as a rough guideline, you may consider long-term care insurance if your parent has at least $100,000 in assets (not including his house and personal belongings).  

Those with ample income. If your parent can afford $300-$600 per month in premiums without affecting their lifestyle, they may consider long-term care insurance.  Some experts have suggested that this type of coverage should not cost more than 5% of a person’s total income, which may be a pretty good guideline to follow.  Also, will they be able to continue paying the long-term care insurance premiums if they rise or if your parent’s income falls.  You need to keep in mind, if your parent fails to pay premiums, their policy will be canceled; so they should not even start this type of coverage unless they plan to continue it. 

Those whose assets and income are not overly ample.
People with a large income or more than $1 million in savings, generally don’t need long-term care insurance as they will be able to pay for their care out of pocket.  However, they might still want it in order to protect their assets for heirs or perhaps just for little peace of mind. 

How do I know if I would be a good candidate for long-term care health insurance? 

Long-term care health insurance is a good buy for various individuals as described above.  Long-term care health insurance is also preferable for people who also fall within the following categories: 

Those who are likely to need long-term care.  Although you can never be sure, you will have to make an educated guess if you will be an individual likely to eventually need long-term care. After the age of 60, the likelihood of needing a nursing home at some point in time is approximately 40%.  The average length of stay is about 2.5 years.  However, 45% of nursing home stays are for three months or less, with the majority being less than one year.  However, 10% of people who enter a nursing home are there for five years or more.  Another 30% of older individuals end up needing assisted-living care, or a significant amount of assistance at home. 
So, what does this actually tell you?  It means that at some point in time you or your loved one have a relatively high probability of eventually needing a nursing home, assisted living or homecare, but, for perhaps not for more than a year or two. 

You can also refine your probabilities of whether or not your loved one may need an expensive nursing home by considering their health and family history.  If they have a family history of sudden fatal heart attacks, then they may be less likely to need extended nursing home care then say a person who has a family history of Alzheimer’s disease.  Are they a smoker?  Do they exercise?  How is their mother’s bone density?  All of these factors play a role in how much care an individual may need some day. 




Another factor in considering whether someone is a good candidate for long-term health insurance is; “Do they have a lot of family support, a wealth of local volunteers, and inexpensive services on which they can rely or do they live in a community with little in the way of social services?” If your mother lives near your sister, who is retired nurse with time on her hands, she is less apt to need nursing home care then a person who lives alone, far from family and other sources of social support. 

Those who have no plans of entering a continuing care retirement community. Continuing care retirement communities as they are referred to, usually charge large admission and monthly fees, but they usually provide almost all the care that will be necessary, from assisted-living to nursing home care.  Having long-term care health insurance would be redundant and not necessary in these circumstances. 

Some information adapted from How to Care for Aging Parents by Virginia Morris 

Additional information and web page by Paul Susic Ph.D. Licensed Psychologist Clinical Director- Senior Care Psychological Consulting

Psych Talk


Leave a Reply

Your email address will not be published. Required fields are marked *