Long-Term Care Insurance

70% of people over age 65 will require some long-term care services at some point in their lives.  40% of those on claim for Long-Term care today are between the ages of 18 and 65.
Do those statistics surprise you?  If so, you’re not alone.  Long-term care insurance is one of the most important types of insurance but it’s also one of the least understood.
Let’s start by answering a few questions.

Long-term care insurance is insurance that funds a variety of medical and non-medical needs for the elderly.  It is also for people who have a disability or chronic illness.  While most care-giving services offer help with normal daily tasks, such as walking, eating and grooming, long-term care can include pain management, preventing unsafe behavior and providing comfort and reassurance.
You can receive LTC services at home or in a number of settings, depending upon your preference, level of independence and ability to pay for the costs of care. Some of your options include:

Assisted living, which provides help with bathing and dressing, medication reminders, and light housekeeping. It’s designed to assist those with minimal needs to remain as independent as possible.

Home care, which can include companions to assist with housekeeping, cooking and shopping. This form of care-giving can involve medical care provided by registered or licensed practical nurses.  Home care can be part time or full time, depending upon your needs.

Nursing home services, for those who need more intensive medical care, such as wound care, rehabilitation or help with respirators or ventilators. Nursing home care may be temporary (recovering from surgery or an injury) or permanent (end-of-life services).

A long-term care insurance policy allows you to feel confident about your future and provides you with resources to help cover the cost of long-term care. The America’s Health Insurance Plans, 2007 National Survey, states the following reasons why people purchase long-term care insurance:

  • Minimize their financial exposure and take responsibility for
    protecting their assets
  • Avoid being a burden on loved ones
  • Enhance their choices and independence — to receive care in the
    setting they prefer

To determine how much you will need to pay for long-term care expenses, take the following items into consideration:

National average costs of long-term care services in 2010‡

Long-term care service Costs
Homemakers $18.61 per hour
Home health aide $20.27 per hour
Assisted living unit $3,369 per month
Nursing home/semiprivate room $195 per day
Nursing home/private room $216 per day

The following statistics reflect the average length of long-term care required by men, women and those of retirement age.

Consumer Average length of LTC
A person over age 65                            3 years
Men Approximately 2 years
Women Approximately 4 years

Long-term care insurance should always offer an option to cover the cost of inflation and protect the value of your money.  The following figures reflect the five-year annual growth rate.

A private nursing home room 3.1%
A semiprivate nursing home room 3.9%
Home care 2.0%
Assisted living care 3.3%


Each Day You Wait Means…
You have no long term care insurance should you need it.
You may put yourself at risk of not being in good health and able to qualify for coverage.

Each Year You Wait Means…
You may have to choose a higher benefit level to keep up with rising long term care costs.
You will pay higher premium rates for the same coverage due to your increased age.

Long-term care preparation should be part of your overall financial plan.  It’s important to understand that LTC costs could deplete your savings quickly and devastate your plans for retirement, your loved ones and negatively impact what you want to give to the next generation in your family.

Ask yourself if you could protect retirement assets and income while covering the costs of care if/when you need it. How will you pay for long-term care?