< < Back - Do I Need LTC Insurance?
Now I Know What LTC Is... Do I Need Insurance For It?
If you are over 50 and expect to retire with more than $70,000 in assets, you probably do. Given the potentially devastating costs of long term care (within a year after admission as private-pay residents, more than 90% of nursing home residents are impoverished
) and the high chances of needing care, Long Term Care insurance is a key part of sound retirement planning. We feel very, very strongly about this. However, we would never say that Long Term Care insurance is right for everyone.
"Don't play with fire. Let LTC insurance save your nest egg..."
First, let's look at the expenses you'd face without insurance. Currently, a nursing home will cost you, on average, $70,800 per year.
By 2030, these nursing homes are expected to cost $190,600 per year. Assuming a stay of 2.6 years, the average nursing home bill in 2030 will be US $495,560.
And by 2060 it will skyrocket to more than $250,000 per year.
At the same time, your risk of needing long term care is high. The probability of becoming disabled in at least two activities of daily living or of being cognitively impaired (common triggers for receiving benefits from LTC insurance) is 68% for people age 65 and older.
While Americans are living longer, they're not necessarily living healthier. The prevalence of cognitive impairment among the elderly has increased dramatically over the past decade, while the prevalence of physical impairment remains unchanged. Currently, 22% of people over age 85 are in a nursing home
and about half of those over age 85 who are not in a care facility require some assistance.
We hope you and your loved ones never need Long Term Care. But early planning can help offset the potentially devastating effects of LTC, if you don't beat the odds.
However, long term care insurance is not right for everybody. Whether or not you should purchase a policy depends on your health, income and assets. If you are retired, with less than $70,000 in assets (not including your home and car) or your only income is your Social Security or SSI benefits, you probably shouldn't be purchasing Long Term Care insurance. There are no hard and fast rules however. $70,000 in Omaha is not the same as $70,000 in Manhattan and everyone's family and health situation is different. Nevertheless, the premiums should be affordable, even if they increased by 25%, without significantly changing your lifestyle. Nobody should have to eat tuna fish every night in order to pay for Long Term Care insurance premiums!
On the other hand, for those with assets to protect, insurance is usually the most cost effective way of protecting those assets from the potentially devastating costs of LTC.
