Long Term Care Insurance - Is It Worth It?

By Compuquotes Team on March 27th, 2008
Long Term Care

Long term care insurance is not a small expense. Depending on your age and circumstances, it can cost as much as much as $2,500 in annual premiums. Of course, the cost for insuring a 70 year old in poor health will be much higher than the cost of insuring a 55 year old in excellent health, but in generally, long term care insurance is one of the most costly types of insurance available.

Is it worth it to you to pay several thousand dollars a year on the off chance that you'll someday need nursing home care or assisted living? The answer is a personal one, dependent on individual circumstances. If you're not certain whether or not you should carry long term care insurance, these are some of the factors that you should take into consideration.

The likelihood of your needing long term care is greater every year. According to the U.S. Office of Personnel Management, 60% of adults who reach age 65 will require long term care at some time in their lives. If you reach age 85, the chances of your spending time in a nursing home are 1 in 4 - but long term care insurance does not cover only nursing home care.

A year in a nursing home can easily cost you or your family $60,000-$100,000 depending on your specific needs and the area of the country in which you live.

By the year 2020, 12 million people will require long term care.

If you are a woman, you are twice as likely to need long term care as a man.

Other factors that should enter your consideration of whether or not to purchase long term care insurance have to do with your personal financial circumstances. For many, long term care costs will be covered by government programs. If you are low income, for instance, Medicaid will cover much of the cost of long term care. If you are a veteran, the VA may cover the costs of long term care for you if you are disabled or if you are low income.

If, on the other hand, you have significant assets that you want to protect, the cost of long term care insurance could be very worthwhile. One way to decide if you should look into buying long term care insurance is to add up the cost of premiums that you'd pay over the course of your life. Chances are that they will total less than the cost of one year's cost of long term care.

Of course, it's important that you consider the policy carefully before buying. Among the factors to consider are:

Elimination period
The elimination period is the period of time during which you must pay for your own care before the policy will pay out. The longer the elimination period, the lower your premium - but the difference may not be worth it.

Inflation Protection
Inflation protection can double the cost of your premiums - but it will make sure that your policy benefits keep pace with the rate of inflation so that you don't end up paying a portion of your long term care costs out of pocket.

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