Consider the Pros and Cons of Long Term Care Insurance
Pros and Cons of Long Term Care Insurance
If you are approaching retirement age, you might wonder if you should include long term care insurance as part of your retirement plans. There is no doubt that different kinds of assisted living or nursing care can be very expensive, and the odds are good that most older people will need this type of care at some time in their lives. However, the premiums can be a big expensive now, and they might keep you from saving money.
So, do you need long term care insurance in order to be sure you can have a safe and comfortable retirement and protect your assets? A lot of financial experts say that people should prepare for the cost of nursing care or assisted living, but not too many people are buying the product. Maybe it is hard to purchase coverage for a need that seems distant or may never come at all.However, it might be time to research the pros and cons of long term care insurance for yourself.
Consider some facts about LTC insurance:
- Very few seniors have private LTC insurance: That National Bureau of Economic Research says that only 10% of elderly people have private long term care insurance.
- Nursing care costs are expected to explode: U.S. expenditures on nursing care are expected to triple by 2040 as costs increase and the population ages.
- Long term care insurance might be expensive: However, studies have shown that typical polices pay about .82 for benefits for every premium-dollar spent, and that an 18% margin is a lot higher than what is allowed by marketplace health insurance plans of other types today. Anyway, it is definitely prudent to shop around.
- Half of seniors will need some kind of nursing care of assisted living: The American Association for Long Term Care Insurance says that 50% of seniors will need some time of nursing care.
- Medicare does not pay for long term care: Medicare only pays for short-term nursing care costs. Medicaid does pay for nursing care, but you might have to spend most of your assets down to quality, and coverage can be very restrictive.
So, here are some cons of long term care insurance. It is expensive, it covers a need that seems distant, and lots of seniors or people approaching retirement age have plenty of other bills to pay. While lots of seniors think it would be a good idea to have private coverage, they defer buying a policy, and they might defer it forever.
One other problem with thee policies is the lack of standardization. They are confusing, and it might be hard for average consumers to figure out which policy is best.
Pros of Long Term Care Insurance Policies
Nobody wants to work hard, save their money, and then find out that they have to deplete all of their assets to pay for the costs of a nursing home or assisted living facility. Having good private long term care insurance can preserve assets for a spouse, kids, or other heirs, and it can give the covered person more choices in the type of care that they can get in their final years.
It is true that you might be one of the 50% of people that never have to go to a nursing or assisted living facility. You could get run over by a bus tomorrow, and that problem would be solved. However, you pay auto insurance premiums hoping that you never have a wreck.
Are There Alternatives to LTCi?
You could save a lot of money, and I mean a lot of money, and you could simply have your kids write checks for the cost of nursing care. However, you need to be able to absorb thousands of dollars a month in costs. You can also find other financial products like permanent life insurance plans and annuities that have riders that can help you pay the bills. Yes, there are alternatives to actual LCTi, and you should explore the pros and cons of long term care insurance versus these other choices.