I’m getting older — both my wife and I are over 50. If they still published it, we’d be getting “Modern Maturity“. So a recent headline caught my eye about people in their 50s needing to think about purchasing long term care insurance before they get much older. Having seen some cases where it has been a life-saver, the notion has stuck in my head.
The problem? I know absolutely nothing about long-term care insurance. I don’t know what to look for or avoid in policies. I don’t know who the reliable carriers are, and who to avoid. I don’t know the tricks of the trade.
So, given that I’ve probably got some friends who are my age, I’m turning to you. What is your advice on long term care insurance… and what other gambling schemes (uhh) types of insurance should I be looking into as I get older?
I have long-term-care insurance as part of a life-insurance policy. I don’t have the details handy, but it definitely compared favorably to what I could buy through my employer at the time. So in addition to looking at straight-up insurance, see what your other insurance may already offer.
(One possibly-important difference: we don’t have kids, so, basically, we need to have enough money for *us* but leaving a legacy isn’t important. YMMV.)
Consumer Reports did an article on LTC insurance. It said the time to buy is when you’re 65. Earlier is too soon, wait till later and the price goes up. So you have a few years to research it. Also AARP ( to which you should belong if you don’t already) has some free information booklets.
Do you, by chance, recall which issue had the article on long term care insurance? We keep CR for a few years back, so we might still have it. Will check AARP. One of our insurance agents also sent us some good info — I’ll put his post here as soon as his compliance officer indicates it is OK.
Received the following in Email from my financial advisor. This wasn’t in response to this post, but is in response to this post 🙂
HOW LTC INSURANCE CAN HELP PROTECT YOUR ASSETS
Create a pool of healthcare dollars that will grow in any market.
Provided by MPACT Financial Group
How will you pay for long term care? The sad fact is that most people don’t know the answer to that question. But a solution is available.
As baby boomers leave their careers behind, long term care insurance will become very important in their financial strategies. The reasons to get an LTC policy after age 50 are very compelling.
Your premium payments buy you access to a large pool of money which can be used to pay for long term care costs. By paying for LTC out of that pool of money, you can preserve your retirement savings and income.
The cost of assisted living or nursing home care alone could motivate you to pay the premiums. Genworth Financial conducts a respected annual Cost of Care Survey to gauge the price of long term care in the U.S. The 2010 report found that:
The most recent (2009) estimate of LTC costs from the U.S. Department of Health and Human Services was even higher than the Genworth survey – $219 per day for a private room in a nursing home, or $79,935 per year.2
Can you imagine spending an extra $30-80K out of your retirement savings in a year? What if you had to do it for more than one year?
Let’s take that $79,935 figure from the government and factor in inflation. At 5% inflation, that private room will cost you $130,206 per year by 2019 and $212,091 annually by 2029.
AARP notes that approximately 60% of people over age 65 will require some kind of long term care during their lifetimes.3
Why procrastinate? The earlier you opt for LTC coverage, the cheaper the premiums. This is why many people purchase it before they retire. Those in poor health or over the age of 80 are frequently ineligible for coverage.
What it pays for. Some people think LTC coverage just pays for nursing home care. That’s inaccurate. It can pay for a wide variety of nursing, social, and rehabilitative services at home and away from home, for people with a chronic illness or disability or people who just need assistance bathing, eating or dressing.4
Choosing a DBA. That stands for Daily Benefit Amount – the maximum amount that your LTC plan will pay per day for care in a nursing home facility. You can choose a Daily Benefit Amount when you pay for your LTC coverage, and you can also choose the length of time that you may receive the full DBA on a daily basis. The DBA typically ranges from a few dozen dollars to hundreds of dollars. Some of these plans offer you “inflation protection” at enrollment, meaning that every few years, you will have the chance to buy additional coverage and get compounding – so your pool of money can grow.
The Medicare misconception. Too many people think Medicare will pick up the cost of long term care. Medicare is not long term care insurance. Medicare will only pay for the first 100 days of nursing home care, and only if 1) you are getting skilled care and 2) you go into the nursing home right after a hospital stay of at least 3 days. Medicare also covers limited home visits for skilled care, and some hospice services for the terminally ill. That’s all.3
Now, Medicaid can actually pay for long term care – if you are destitute. But are you willing to wait until you are broke for a way to fund long term care?
Why not look into this? You may have heard that LTC insurance is expensive compared with some other forms of policies. But the annual premiums (about as much as you’d spend on a used car from the late 1990s) are nothing compared to real-world LTC costs.5 Ask your financial or insurance professional about some of the LTC choices you can explore – while many Americans have life, health and disability insurance, that’s not the same thing as long term care coverage.
MPACT Financial Group specializes in combining sophisticated investment strategies to address our clients goals of wealth accumulation and net worth preservation with an emphasis on risk management and reducing portfolio volatility. If you or someone you know would like a review of your investment portfolio by our team of specialists, please feel free to contact us.
MPACT Financial Group may be reached at 972-726-5924 or teammpact@mpactfinancial.com. http://www.mpactfinancial.com
This material was prepared by Peter Montoya Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information should not be construed as investment, tax or legal advice. The publisher is not engaged in rendering legal, accounting or other professional services. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.
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Citations
1 genworth.com/content/etc/medialib/genworth_v2/pdf/ltc_cost_of_care.Par.85518.File.dat/Executive%20Summary_gnw.pdf [4/10]
1 genworth.com/content/etc/medialib/genworth_v2/pdf/ltc_cost_of_care.Par.85518.File.dat/Executive%20Summary_gnw.pdf [4/10]
2 – longtermcare.gov/LTC/Main_Site/Paying_LTC/Costs_Of_Care/Costs_Of_Care.aspx [5/12/10]
3 – aarp.org/families/caregiving/caring_help/what_does_long_term_care_cost.html [11/11/08]
4 – pbs.org/nbr/site/features/special/article/long-term-care-insurance_SP/ [11/11/08]
5 – longtermcare.gov/LTC/Main_Site/Paying_LTC/Private_Programs/LTC_Insurance/index.aspx [6/25/09]
MPACT Financial Group
12720 Hillcrest Road Suite 1020, Dallas, TX 75230
Phone: 972-726-5924
TeamMPACT@mpactfinancial.com http://www.mpactfinancial.com