While many of us do not blink an eye when the conversation to purchase auto or homeowners insurance comes up, the atmosphere changes quickly when long-term care insurance is discussed. Perhaps this is because most people do not want to contemplate getting old, being admitted into a nursing home or needing in-home care, and understandably so. Similar to other types of insurance in terms of offering protection, long-term care insurance also offers preservation of wealth, a crucial necessity as we age.
If you’re asking yourself why you should even consider long-term care insurance, take a look at these shocking statistics:
- According to the U.S. Department of Health and Human Services, it is estimated that at least 70% of individuals over the age of 65 will require some long-term care services at some point in their lives.
- In Texas, the average cost of a private room in 2012 was $61,320 per year, and this cost is expected to increase to a whopping $108,002 per year by 2037.
- Furthermore, one in five of today’s 65-year-olds will need long-term care services for longer than 5 years.
Investing in a long-term care insurance policy can give you peace of mind — and the freedom to use your nest egg for things you love, rather than having to save it for possible nursing-care needs. So, with that being said, let’s take a closer look at long-term care insurance and how it can safeguard major areas of one’s life.
Long-Term Care Insurance Simplified
Think of long-term care insurance as having access to a pool of money to pay for long-term care expenses at some point in the future. Long-term care insurance will pay a daily or monthly benefit towards the cost of care services from an assisted living facility, nursing home, or home care when you cannot take care of yourself regarding the activities of daily living such as eating, dressing and bathing.
Average Costs for Long-term Care
Although the cost of long-term care is based upon the type of care you need and the duration you will need it for, the average costs of long-term care in the U.S., may surprise you. The U.S. Department of Health and Human Services has estimated that your costs for a private room in a nursing home can cost up to $6,965 per month. Plus, long-term costs can be affected by factors such as the time of day you need help, extra fees for housekeeping and additional food, and activities that may not be all-inclusive. As a result, long-term care can be very costly. That’s why purchasing long-term care insurance now may make sense.
Premiums for long-term care are determined by your age, health conditions and many other factors. The cost of a long-term care policy is based on the following factors:
- Your age when you buy the policy
- The maximum amount that a policy will pay per month
- The maximum number of months, that a policy will pay
- The lifetime maximum amount that the policy will pay, which is calculated by multiplying the maximum amount per month times the number of months
- Any additional benefits you add (i.e. inflation protection)
Who Should Purchase Long-Term Care Insurance?
The reality is, there are multiple answers to this question. First, there are people who either cannot afford to self-fund their own care or do not want to use their own money for their care. This is a great example of preservation, especially for Texas physicians whose income is above average when compared to the national average. By using the insurance benefit, and not depending on your own savings, you are able to protect your assets and also preserve your estate.
Second, people above the age of 50 should consider long-term care insurance. Why? Well, for starters, no one can predict an event in the future that may require long-term care assistance. While most people use this insurance during their later years to cover costs due to declining health, it can help people at younger ages in some instances.
The average age of people purchasing coverage today is between 50 and 60, but keep in mind that this type of insurance can be nearly impossible to secure once you are older and have preexisting conditions or poor health. If you do find an insurance company who will work with you once you’ve developed a health condition, expect rates to be higher.
Long-Term Care Insurance and Safeguarding Independence
As a Texas physician who witnesses the impact of injury and illness on a family unit firsthand, the topic of independence is important to consider. Simply put, no one wants to become dependent on someone else. To help preserve your independence, long-term care insurance can help you afford outside help, so that you don’t have to rely on family members each day when it comes to activities of daily living. This allows family members freedom and the opportunity to supervise your care rather than be the sole provider of it.
In some cases, it can also help you preserve your independence in terms of staying in your own home, rather than going into an assisted living facility or nursing home to receive care.
Reducing Stress with Long-Term Care Insurance
While it is a topic no one wants to think about, take a second to contemplate if you were to become severely ill or injured and needed long-term care. Do you have extra funds set aside to pay for daily care, in addition to your regular monthly expenses? When considering that question, keep in mind that the average annual amount of in-home or nursing home care in the US is around $76,000 per year and with 30% of individuals staying in the nursing home for 1-3 years, your cost could be up to approximately $228,000. Also, be aware that health insurance does not cover long-term care expenses.
Instead of playing the odds, prepare for the future and any unexpected speed bumps along the way with a long-term care policy. This will give you the peace of mind when it comes to your future and help relieve a lot of stress down the road regarding how to pay for the care you may need. Bottom line, having long-term care insurance gives you the freedom to spend your hard-earned savings the way you prefer. Protect yourself today by securing a policy that will preserve your assets, independence and the well-being of your family.For more information about long-term care insurance, feel free to reach out to us. We’ll partner you with an advisor who can answer any questions you have and provide you with any additional information you may need.