A recent CNN/Money magazine article poses the question: “Is Long Term Care Insurance worth the price?” One could easily ask the question the other way around in order to explore and debate the the issues surrounding this important type of insurance. As the article points out, there have been some substantial rate hikes recently by a few of the major insurers. The cause? Well, put simply, people are living longer and thus filing more claims and using their Long Term Care Insurance benefits at a higher rate than the actuaries anticipated years back. While these rate and premium increases are a reality, they must be put into perspective with the high cost of long-term care services such as nursing homes, in-home care and assisted-living care, among others. So, while no one wants to see their premiums rise, paying out-of-pocket for long-term care is daunting proposition as well. Any rate increase must go through the State’s Insurance Department so it’s a highly regulated process and a last resort.  Thus, rate hikes should not deter most Americans from investigating a Long Term Care Insurance policy to add to their retirement portfolio. Aside from saving for retirement itself, purchasing a Long Term Care Insurance policy could just be the smartest move you make toward securing a peaceful, secure retirement.

Long Term Care Insurance is insurance that covers the costs of so-called long-term services which include nursing home stays, assisted-living facilities, adult day care, in-home care and other similar offerings. This type of insurance is not covered by regular health plans nor by Medicare. While the very poor can receive benefits through Medicaid, and the very wealthy can likely cover their costs out-of-pocket, the vast majority of us will need Long Term Care Insurance to help with these costs. These costs are significant and without insurance, many are forced to exhaust their assets and savings until the qualify for Medicaid and are thus unable to pass on their assets to their children. This can be a humbling and often sad way to spend one’s twilight years.

Some figures to consider (annual average costs for the following services):

With people living longer and rates of diseases like dementia and Alzheimer’s on the rise, estimates of the risk you’ll need some form of long-term care after you pass age 65 are roughly 2/3. Yet, less than a third of all Americans have this important type of insurance coverage. This is a potentially troubling situation. Many people simply assume that their children or other relative will care for them or are simply ignorant of these high costs for long-term care services. And, the moderately well-off are not immune to this problem.

As the CNN/Money Magazine article points out, it’s precisely those with a fair amount of savings or nest egg that should be looking into Long Term Care Insurance. Even a couple with over a million dollars in assets can quickly see their nest egg vanish due to nursing home or other costs. So, Long Term Care Insurance is a smart move to insure that you can pass on your assets to your heirs.

To keep costs of your premiums low, there are many options such as level of coverage, delaying the amount of time until benefits kick in (elimination period) or speed-paying premiums by paying more over a shorter amount of time. Regardless of how one looks at the numbers, the reality is that for most of us, Long Term Care Insurance should be an essential part of our retirement portfolio and the underlying reasons to have this type of insurance aren’t any less relevant in light of the ebb and flow of the premium rates.

Need help in navigating the many choices regarding Long Term Care Insurance plans? There is no need to be put off by the complexity and range of options when considering a Long Term Care Insurance plan. LTC Tree can help you find a plan that is right for you, no matter your age or financial status.