A good long-term care policy helps you pay the cost of nursing home care, adult day care, assisted living arrangements, and home-based care. So, should you buy one? Here are some general factors to consider:
- Are you single or married? Generally, married people are in greater need of a LTC policy since the cost of nursing home care can exhaust your savings and make it difficult for the spouse to maintain his or her standard of living. While most states will allow the non-institutionalized spouse to keep a home, a car and some assets, the financial drain may drastically change your lifestyle. If you're also concerned that your children get your assets, you'll want to make sure you have adequate insurance (and good estate planning) to cover possible nursing home care costs. On the other hand, if you're single, and you don't have to worry about children or other heirs or charitable organizations getting your money, you're probably better off without the insurance; plan on paying the bills out of your savings.
- How old are you? A good time to buy a LTC policy is in your early 60s (60–65). If you're a younger person, the cost of the insurance will be lower but you'll most likely be paying it for a longer time. If you decide to wait until you're in your 70s, the policy can be quite costly and you also run the risk of not being insurable.
- How is your financial situation? If you have very little savings or income in retirement, there's no need to purchase a LTC policy. You'll end up spending more than you could afford and Medicaid will most likely pay your nursing home bills. If you have cash and investments, other than your house, that exceed the government established limits per person, it is worth considering.
- What is your family history related to diseases such as Alzheimer's, arthritis, stroke, etc.? If these or other debilitating diseases run in your family, you should strongly consider purchasing long-term care insurance.
Review the following table to help you make your decision:
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If You Are over Age 55, and:
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Should You Consider Long Term Care Insurance?*
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You expect to have no assets other than a home, car, clothing and a burial plot.
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No—You will probably qualify for Medicaid anyway.
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You cannot afford the premiums.
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No—If you fall behind on the premium payments, you will lose coverage anyway. Also, it is better to devote the premium payments to retirement savings instead.
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You have a life-threatening illness, and strongly feel that you will not live past age 70.
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No—If it is not likely that you will live past age 70, the odds of having a long stay in a nursing home are small. Check to make sure that you have adequate medical insurance.
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Your family has a history of diabetes, Alzheimer's disease, arthritis, stroke, etc.**
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Strongly consider—These illnesses can result in long nursing home stays and tend to run in families. If there are assets to protect, long-term care insurance may be a good investment.
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There are significant assets other than a house to protect.
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Yes—You have significant assets to protect and it may be difficult to qualify for Medicaid.
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You want your house to go to family or friends and not to be used for unpaid long term care costs after you (and your spouse) die.
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Yes—Although the house is protected from Medicaid, many states can seize the property after you and your spouse die.
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You strongly object to being on Medicaid.
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Yes—Medicaid is government assistance that puts strict limits on people in the program.
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You want choices when selecting a nursing home.
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Yes—Some nursing homes do not accept Medicaid patients in their facilities. If you can pay with insurance, you will have more options.
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You do not expect relatives or friends to be available to help take care of you.
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Yes—Without having a network of family or friends to assist you, the chances of needing home-based or nursing home custodial care increases.
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You are over the age of 79.
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No—It may not be available or may be too expensive.
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* The appropriateness of purchasing long-term care insurance is dependent on the specific facts and circumstances of each individual.
** If you have an existing health problem that is likely to result in the need for long-term care, you will probably not be able to buy a policy due to medical underwriting standards.
